I am a self-employed individual working in the software industry; my current salary is commensurate to the market value of a software developer with 5 years of experience. I have not yet opened up a retirement account, but need one to get started with investing.
Although a SEP-IRA permits higher contributions, it appears that, unlike the Roth, all your capital gains are taxed upon withdrawal at age 59. On the other hand a Roth IRA account requires a maximum income between 120k and 180k, depending on whether or not you have a spouse.
Does the tax break provided by the Roth outweigh the higher contributions permissible with a SEP?
Furthermore, if for some reason I decide to enter traditional employment I will no longer be able to contribute towards a SEP-IRA.
Please share some insight on the advantages and disadvantages of a SEP vs Roth, and which might be more beneficial for my situation.
Also, if it's not too much to ask, a lot of folks seem to have a Roth IRA in addition to their traditional 401(k), matched by their employer. What is the purpose of doing so? Is the employer match the only benefit of a 401(k)?