I know she can not do that because she is not an employee.SEP IRA seemed an option but someone told me that she can not use that.”------> I guess the easiest way for an independent contractor to fund a retirement plan is to set up a Simplified Employee Pension (SEP) IRA plan or a one-person 401(k) plan Like a traditional IRA, the money invested in SEP IRAs and one-person 401(k) plans is tax deductible and grows tax free until the money is withdrawn at retirement. You need to check out stock brokers or some investment firms, i.e., Fidelity Investments etc., which offers SEP IRA and 401(k) plans with no setup fees. For example, your spouse, as an independent contractor, may have a SEP-IRA. This special type of retirement account has far higher contribution limits( for 2009, the lesser of 20% of net earned income before SEP deduction or $49,000) than many other types of retirement accounts, making them great for those who want to put aside a lot of money to grow beyond the reach of taxes for years, if not decades. Your spouse can open a SEP-IRA with virtually any stock broker as said above and she can use it to invest in shares of stock, bonds, mutual funds, real estate investment trusts, and more. Any dividends or capital gains she receives will continue to stay in the account to grow for her tax-deferred until she withdraws the money at her retirement. That means that issues such as the dividend tax won't matter to her for a long, long time.