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What is a SEP IRA?

Run your own shop and plan to keep it that way? The Simplified Employee Pension (SEP) IRA is probably your best bet. It is the plan of choice for most sole proprietors and moonlighters.

You can open one at virtually any bank, mutual fund sponsor or brokerage firm. Annual account fees are low - or non-existent.

Your contribution limit is based on a simple formula: You can put away as much as 25% of your net income, up to a cap that increases periodically to keep pace with inflation - $49,000 in 2010.

Money stays sheltered from taxes during your savings years, and what's additionally appealing is a SEP's funding flexibility. You can wait to fund the plan until you file your taxes. So if your income turns out to be higher than expected, you can make a large contribution and cut your tax bill. If you have a tough year, you can scale your contribution back.