Self-employment offers special challenges but also special advantages in saving for retirement. A Keogh plan is a tax-deferred retirement plan, similar to a 401(k), except that it is geared toward self-employed individuals. If you are self-employed, you can contribute up to $40,000 per year to a Keogh plan.

There are two different Keogh plans to choose from: a profit sharing plan, with a variable contribution rate and the availability of in-service withdrawals; or a money purchase plan, with a fixed annual contribution rate.

Self-employed people may choose instead to set up a Simplified Employee Pension, also known as a SEP-IRA, to which they can contribute 15% of their income, up to $40,000 a year. The SEP-IRA does not require special paperwork and annual filings, and so it is a less cumbersome alternative. Also available to small-business employers with employees are SIMPLE plans and SIMPLE 401(k) plans. Check with your tax adviser to see which type of plan would be best for you and your business.