Retirement Plans for the Self-Employed

And for those of you who are over 50, keep in mind you don't get a catch-up provision with a SEP-IRA. With the solo 401(k), you can tack on another $4,000 to your $14,000 deferral.

If you have 100 or fewer employees, you may consider a Simple IRA, which is basically the same as a SEP-IRA except your contribution is capped at $10,000 ($12,000 for people 50 and over). If you're on your own now and anticipate adding employees to the payroll in the near future, this may be a good option.

In addition, if you don't make a ton of money but are able to sock most of your profits away, the Simple IRA could be a good choice. Let's say your business only makes $20,000 but you can afford to save $10,000. With the Simple IRA, you can. If instead you had a SEP-IRA, you'd only be able to contribute 20% of that $20,000, or $4,000, notes Fooden.

Big note: Your Simple-IRA plan must be up and running by Oct. 1 of the current tax year to qualify.

If you're just getting your company off the ground, an IRA may be a good place to start. And know that you can always roll an IRA into a solo 401(k) down the road when your business starts to boom.

So call Fidelity, Citigroup's (C) Smith Barney unit, T. Rowe Price (TROW), Charles Schwab (SCH), or any other broker, and start saving. Pick a plan and put money away monthly. And then think about how great it will be when you finally pass on the business you started to your kids, and retire to your dream house in style.

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