Experts say it's not as difficult as it seems. Here are what they say are the top three retirement plans for the self-employed. (By the way, IRS Publication 560 is mandatory reading for those who are self employed. That publication can be found at this site.)

The SEP

        The SEP is the plan of choice for most self-employed Americans regardless of age and income, says Barry Picker, certified public accountant and author of "Barry Picker's Guide to Retirement Distribution Planning." Technically an IRA, the SEP works especially well for people who enjoy simplicity and who have modest or irregular income, but want to contribute more than the maximum allowed in a traditional IRA.

        Unlike other plans, such as the SIMPLE IRA or the Keogh, you can set up and fund a SEP after the end of your tax year. Plus, there's not much administration or paperwork involved. There are no annual reporting requirements and most SEPs don't have to file the Form 5500 reports required of most qualified retirement plans.

        Assuming your business has a profit, you can set aside quite a bit of money in a SEP versus a traditional IRA or SIMPLE IRA: it's the lesser of 25% of compensation or $42,000 for 2005. By contrast, the limit on a traditional IRA is $4,000 or $4,500 for workers 50 and older. What's more, unlike in defined benefit plans the contribution is completely discretionary. You can fund it one year and not the next. It doesn't have to be a recurring contribution.

        According to Picker, the biggest downside is that you can't borrow money from a SEP as you can with other types of plans such as the Keogh. Other disadvantages: Assuming you have the compensation, you can contribute more to a 401(k) or defined-benefit plan than to a SEP. Plus, the money in these plans can be tied up for many years and those who may need to such funds would pay taxes and possibly penalties to get at it. And should tax rates rise, withdrawals might costs more than the tax savings.

Self-employed 401(k)

        Twila Slesnick, author of "Creating Your Own Retirement Plan," says the self-employed 401(k) plan is the plan of choice for workers who want to set aside more money than what they can in a SEP (though less than in a DB plan), but don't want the inflexibility and headaches of a DB plan.

        Typically, Picker says, it's a person who might earn $100,000 or more and who may not need their income for living expenses. The big upside: you can make tax-deductible 401(k) salary deferrals to the plan of up to $14,000 for 2005. And if you are 50 or older you can make an additional catch-up salary deferral contribution of $4,000 for 2005.

        What's more, the plan also lets business owners make tax-deductible profit-sharing contributions of up to 25% of compensation, up to the annual maximum of $42,000, for the 2005 plan year. When you add it all together, the total of salary deferrals and profit sharing contributions cannot exceed $42,000 for 2005 or $46,000 if age 50 or older.

        As with the SEP plan, you of course have to make a profit to contribute to a 401(k). Plus, the contributions are discretionary. The big downside: you have to set up the plan before the end of the tax year of the contribution, usually Dec. 31.

        What are some of the downsides? Slesnick says it's not as simple to establish and maintain as a SIMPLE IRA or SEP, but as long as you have no employees and use a prototype plan it shouldn't be a big hassle. What's more, you will have to file an annual return once plan assets exceed $100,000.

Defined-benefit plan

        The solo defined benefit plan, according to Martin Nissenbaum, national director of personal income tax planning at Ernst & Young, is the plan of choice for self-employed workers age 50 and older who have high and stable income (at least $160,000 per year) and who wants to sock away as much as possible (more than $42,000) and reduce their taxes as much as possible in the shortest amount of time.

        But unlike a 401(k) or a SEP, contributions to a DB plan are mandatory. So self-employed workers who choose this plan will need to make a contribution even in years when they have no income. What's more, self-employed workers who use a DB plan should figure on more paperwork and more costs. These plans require an annual filing. Plus, you'll have to pay an consultant and an actuary to create the plan and calculate annual contributions -- a few thousand to set up and $1,500 per year for maintenance.

        Other issues: if the plan is overfunded you will have to pay penalties. One way out of this, by the way, is to put your children on the payroll. And you may have to worry about nondeductible contributions. Self-employed workers who use a DB plan also have to worry about filing and contribution deadlines; you have to fund the plan 8 1/2 months after the tax year ends, usually Sept. 15 for most self-employed.