ezeiza:

In 2007 I started moonlighting for extra cash and I'm considered an idependent contractor, not an employee.  I therefore have not paid any taxes on the money earned yet (in 2008 I will have to start paying quarterly taxes on this money).

 In about 2-3 years my salary should increase significantly and I will therefore be in a higher tax bracket.  I wil likely have a fairly hefty tax bill this year.  Does it make any sense to start a SIMPLE or SEP IRA at this point in time given the likely increase in my future tax bracket?  Thanks so much for the advice.

Jay-B

Hi Jay-B:

IMO, anytime you can defer taxes on a nice chunck of your income is a good time to do so. Remember, even though you'll be in a higher tax bracket later, you don't have to start your withdrawals until you're 70.5. Hopefully, by that time you'll be retired and probably in a lower tax bracket.

Regards,

Mel