I'm a dentist, my husband is an architect, trying to make it on his own by starting his new firm in which he is the only employee (for right now anyway). It is not bringing in much money now, but we are hoping to set up a 401 k and put all allowable income into that and just live off my income. However after speaking to our accountant, she recommended setting up a SEP rather than the 401k, because the SEP would cost us less set up fees (as opposed to the 401 k, it would probably cost more in fees because we have to pay the financial advisor to do it). But our financial advisor insists on the 401k. Here's what the financial advisor says: "I can’t imagine a scenario where the SEP IRA is going to be a better option. This is actually a very common discussion item with accountants. 5-10 years ago, a SEP would have been a better option but there have been some key updates since then to make the 401(k) a better option. Most accounts assume that there will be administrative costs to keep a 401(k) in operation but there won’t be any for you since you have no employees. The key difference is that you will be able to make contributions to a backdoor Roth IRA ($5,500 per year that grows tax free). You wouldn’t be able to do that with the SEP IRA. Otherwise, they are very similar accounts. Exact same investment options, exact same fee structure, etc."
How do I decipher which "expert" to listen to here, our accountant who says SEP or our financial advisor who says 401k?
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