All of the above plans are subject to high penalties for early withdrawal. Most withdrawals should not take place until age 59 ½ (there are a few exceptions). Penalties are 10 per cent for Federal taxes and 2.5 per cent for California taxes.
All of the above retirement plans may be established at numerous locations. Your first decision is to choose your plan type, IRA, SEP-IRA, SIMPLE or KEOUGH. Then you need to decide whether you want to establish it at a bank, brokerage house or mutual fund company. Banks may not offer the range of investment options that other choices have, and their fees will probably be high. A brokerage account allows you to buy stocks, bonds or money markets, either individually or in mutual fund form. Mutual fund companies may push their mutual funds, though some are now brokerage houses too (i.e. Fidelity).
In deciding where to place your retirement funds, think of the quality of the company, the costs involved (is there a yearly fee? Commission rates? What if you want to move your money, is there a fee?), the convenience (phone transfers, office locations if you like to talk with the people), and whether you need advice on how to invest the money.
Personally, I use Waterhouse Securities for my IRA and SEP-IRA. There are no annual fees, commission costs are low and I have many investment choices. I do many trades on-line, and do most of the paperwork by mail, though they do have walk-in offices.
If you don't have a lot of money, and/or you like the idea of mutual fund investing, I recommend the Vanguard Group. They charge $10 a year, but their mutual funds have very low expense ratios and their funds have performed well in the past. I don't know if they have SIMPLE plans, though they probably do.
People choose full-service brokerage houses when they want advice for their investments.
Starting in 1998, retirement plan rules are changing. There is a new ROTH IRA that I recommend for anyone with the allowed income level (under $150,000). This allows a person to put away $2000 now, with no tax deduction. But after five years, all money withdrawn will be tax-free if used for a certain purpose, or wait until 59 ½ and all money may be withdrawn tax-free. This new ROTH IRA is a no-brainer for those of you who can afford to save money.
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