My father is 58, with no retirement accounts. He's run a sole-proprietorship for most of his life with 0-1 employees and doesn't have too much in savings. We're exploring the options of a Traditional IRA, SEP IRA, SIMPLE IRA, and Self-Employed/solo 401k.

I want to start him easy on index or target date funds and maybe explore more down the road. I'm familiar with Traditional (and Roth) IRAs, though I'm starting to research the details of what happens near retirement age. He doesn't have much, his primary form of retirement right now is what he's put into social security.

Are there any issues I should watch out for if I just start him out on a Traditional IRA then later do a SEP IRA, Simple IRA, or Self-Employed 401k (if it's advantageous down the road)? Meanwhile we'll do some more research and find what's tax-friendly for him.

1 Answer 1


Unfortunately, it is not a great situation for your father. The main benefit of retirement accounts is many years of tax-deferred growth. Since your father is close to retirement he's missed most of that.

You said your father doesn't have much savings. It would be helpful to know if this is due to lower income or excessive spending.

The best option for your father is to figure out how to earn more money or to spend less to increase his savings. A retirement account is not going to be a magic bullet.

One issue to watch out for is that a SEP IRA has requirements for providing benefits to employees. If your father has an employee, then you need to make sure you understand those rules. I'm less familiar with Simple IRA and self-employed 401k but they might have similar requirements.

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    Some of those many years of tax-deferred growth come after retirement. Commented Nov 28, 2021 at 16:22
  • My question is more about retirement accounts, not about living in the past, but trying to salvage a future. I don't see how letting money sit in a savings account is more beneficial than a retirement account and never said it would be a magic bullet. I don't see how it helps for my question, but it's due to lower income; I don't need advice to help him increase his income (out of scope for my question), we have contingencies for that.
    – BLaZuRE
    Commented Nov 28, 2021 at 19:35
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    @BLaZuRE, sorry if the answer came across too negative. A retirement account definitely has benefits over a savings account, but given his situation it will be tough to take advantage of those benefits (e.g., if he'd start taking disbursements at age 65). Feel free to update your question to clarify what you'd like to know about retirement account options.
    – minou
    Commented Nov 28, 2021 at 20:46

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