SELF-EMPLOYED? DON'T FORGET RETIREMENT PLANS (FINANCIAL FOCUS)

This "Financial Focus" column is prepared by Edward Jones Investments, headquartered in St. Louis. Jones includes branches throughout the nation, including Cape Girardeau and Jackson.

If you're self-employed or a small-business owner, then you've got many responsibilities. You've got to attract new business. You've got to keep your cash flow running smoothly. You've got to make sure your customers are satisfied.

And, somehow, you've got to get the work done, too.

In fact, you could be so busy you overlook your own retirement planning and if you don't do it, nobody else will.

Fortunately, it's not too hard to find a retirement savings plan that's right for you. Two options you may want to consider are SIMPLE IRAs and SEP IRAS. Both offer tax-deferred earnings growth. And both plans were designed specifically for small-business owners.

You can fund either plan with almost any investment you choose, such as stocks, bonds, mutual funds or other securities. And you can contribute a significantly larger percentage of your compensation to a SIMPLE or SEP IRA than you can to a regular IRA.

Here are a few specifics for each type of plan:

SIMPLE IRA -- A SIMPLE IRA is very much like a 401(k) -- but without the hassles. The SIMPLE IRA is easy to administer, involves very little paperwork and has no minimum participation requirement. Furthermore, a SIMPLE IRA does not require the complex IRS testing that's necessary with a 401(k).

With a SIMPLE IRA, you and your employees can defer up to $6,000 a year. As the employer, you are required to either match employee contributions (dollar-for-dollar up to 3 percent of compensation) or contribute 2 percent of compensation to all eligible employees. These contributions are a tax-deductible business expense and will grow on a tax-deferred basis. You can choose to exclude those employees who earn less than $5,000 a year and employees who have not worked for your business for two years.

Although you are required to contribute to your employees' SIMPLE IRAs, you have the flexibility to reduce your matching contribution from 3 percent to as low as 1 percent -- but you can't reduce the match in more than two out of five years.

SEP IRA -- As with the SIMPLE plan, the contributions you make to a SEP IRA are tax-deductible, and the earnings grow tax-deferred. With a SEP IRA, you can contribute the lesser of $30,000 a year or 15 percent of compensation (or earned income, if you're self-employed). You can exclude employees who have not worked for your business for three years, and those employees who are under 21.

How will you know which plan is right for your business? There's no one definitive answer. Your tax adviser can help you evaluate the two plans, along with any other options that may be appropriate for you.

No matter which plan you decide upon, it's clear that any choice is better than taking no action at all. When it comes to building retirement savings, time is your greatest ally. Don't let it slip away.

The Southeast Missourian does not recommend that readers buy or sell stocks featured in this column, which is provided for informational purposes only.