David Ashley Parker, of Powder Springs, CO, is in the 22 percent marginal tax bracket and is considering the tax consequences of investing $2,000 at the end of each year for 30 years in a tax-sheltered retirement account, assuming that the investment earns 9 percent annually. How much will David's account total over 30 years if the growth in the investment remains sheltered from taxes?

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A: *Answer:

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A:

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Tax Deferred Retirement Benefits

It stands for Simplified Employee Pension Individual Retirement Account. This savings plan is for self-employed persons such as independent contractors, freelancers, entrepreneurs, etc. The tax rules of SEP IRA are the same as traditional IRA. Entrepreneurs can also open SEP IRA accounts for their employees and gain a tax advantage. The employees cannot make contributions to these accounts by themselves however they will be taxed upon withdrawal.