BUSINESS

Retirement plan options come in all shapes and sizes

Personal Finance. By Katherine Vogt, AMNews staff. June 13, 2005.

As with fashion, what was right for you last year in retirement planning might be a bad fit or outdated now.

Changes to rules and regulations, and industry innovations, have paved the way for new types of retirement plans. That evolution, coupled with individual lifestyle changes, has prompted a growing number of professionals to reconsider whether they have the right plans.

"People are starting to learn more and ask better questions. You're getting people who are saying, 'I need to look at my retirement from a different point of view,' " said William Connington, a wealth adviser with Connington Wealth Management Group in Pine Brook, N.J.

For many physicians, this means looking at the retirement plans available to the self-employed. Though the mainstream plans -- 401(k), SEP IRA, defined benefit and SIMPLE IRA -- might sound familiar, some are being used in new ways.

One of the most popular plans is the 401(k), which allows employees to set aside tax-deferred income for retirement, with the employer often matching at least part of the contribution. Employees can set aside up to $14,000, plus another $4,000 if they are older than 50. Total contributions cannot exceed $42,000, or $46,000, depending on the age provision.

Traditionally, these plans have been used by companies with multiple employees.

But over the last few years, a new 401(k) designed for one-person businesses has entered the market. Known as a "single k" or "individual k," it works like a standard 401(k) but is less expensive, making it affordable to single-person businesses.

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