TAX PLANS

Tax Deferred Accounts.... Some Options and Variations:

Traditional Pretax 401(k) or Roth 401(k)

All employee contributions to both traditional pretax and Roth 401(k)s must be made by end of year. The maximum contribution is $16,500, but a worker who will be 50 or older this year can make an additional $5,500 catch-up contribution.

Solo or Individual 401(k)

If you’re self-employed and want a 401(k) for 2010, you must set it up by Dec. 31. If, however, you operate as an unincorporated sole proprietor (reporting your business earnings on Schedule C), you have until you file your 2010 tax return—as late as Oct. 17, 2011—to fund 2010 contributions.

Traditional IRA

You can make a 2010 individual retirement account contribution of up to $5,000 per person ($6,000 if you’re 50 or older) up until the normal 2010 tax return due date of April 15, 2011.

Roth IRA

You can make a 2010 contribution of up to $5,000 ($6,000 if you’re 50 or older) up until the normal 2010 tax return due date of April 15, 2011. However, if you earned too much to contribute to a Roth (over $105,000 for a single, or $167,000 for a couple), you can move the money to a traditional nondeductible IRA up until Oct. 17, 2011.

Simple IRA

This retirement savings account for the self-employed must have been set up by Oct. 1 if you want to use it for 2010. If you already have a Simple, you can make 2010 employee contributions of up to $11,500 pretax ($14,000 if you’re 50 or older) up until Dec. 31, 2010.

SEP IRA

A SEP IRA is often the best choice for a high-earning self-employed individual and for moonlighters, since SEP contributions aren’t affected by contributions to an employer-sponsored 401(k). For 2010 you can shelter up to $49,000, depending on how much you earn. A SEP doesn’t need to be set up or funded until the due date for your 2010 tax return, including extensions–Oct. 17, 2011.

529 College Savings Plan

The money you put in a 529 state college savings plan grows tax-free, and withdrawals aren’t taxed if used for college expenses. While there isn’t a strict yearly cap or a federal deduction for contributions, there’s an annual gift tax exemption of $13,000 you can use to fund an account.

Coverdell Education Savings Account

You can contribute $2,000 per child in after-tax money to an ESA for 2010, up until April 15, 2011. The money in an ESA grows tax-free, and withdrawals aren’t taxed if used for educational expenses. For now that includes computers and private day school, but could be limited to college expenses as of Jan. 1, if the Bush tax cuts aren’t extended.

Flexible Savings Account

You must decide by Dec. 31–but maybe a lot earlier, depending on your employer’s policies–how much to stash pretax for 2011 in an employer-sponsored flexible savings account for medical expenses and/or dependent care. You can put away up to $5,000 per couple for childcare expenses; there’s no dollar limit on medical expenses for 2011 except the one your employer sets.

Health Savings Account

To open an HSA you must have health insurance with a high deductible. You can then contribute a maximum of $6,150 pretax for family coverage ($3,050 for individual). HSA withdrawals for medical expenses are tax-free, so you get a tax break on both ends. The set-up deadline for 2011 is Dec. 31, 2010 or earlier, depending on your employer’s open enrollment period.

There may be more tax-saving strategies for this year and beyond.

A little organization can be one of the greatest gifts you leave behind for your heirs.