Pitfall in this saving strategy

Dear Liz: I'm self-employed and have a Simplified Employee Pension account. Every year I borrow from an equity line to contribute the maximum to this account. My wife questions whether we are ahead by doing this. I say yes because we obviously save on the amount we pay in taxes and are paying only 5.25% on the equity line. We hope to pay off the loan in six months, plus we get to write off the interest. Is this a good plan?

Liz Pulliam Weston

April 20, 2008