Under funded SEP Question

[Kram BergGold]

I think we discussed this years ago but I want to be sure this00 is okay. For 2008 my client claimed a $25,000 SEP deduction. She just discovered that she only deposited $20,000. However she made a 2008 non dedcutible IRA contribution of $6,000. As a SEP/IRA is an IRA can I just send in a revised 8606 showing a $1,000 non deductible IRA instead of the $6,000 and then say the $5,000 in the Traditional IRA is a SEP contribution?

[sea-tax]

Did she file an extension?

[Bees Knees]

Once money has been deposited into a SEP IRA, the money in the account is treated as a traditional IRA. That does not mean that a traditional IRA contribution can be treated as a SEP IRA contribution. Each has their own separate unique set of rules. For example, the contribution limitations differ.

Assuming the traditional IRA contribution would have qualified as a SEP IRA contribution, I would say you would have to have the IRA trustee re-classify the contribution on paper as a SEP IRA so that when the trustee sends the IRS the Form 5498, it is reported as a SEP contribution rather than an IRA contribution.

[Burke]

Assuming the traditional IRA contribution would have qualified as a SEP IRA contribution, I would say you would have to have the IRA trustee re-classify the contribution on paper as a SEP IRA so that when the trustee sends the IRS the Form 5498, it is reported as a SEP contribution rather than an IRA contribution.

I would say you are correct, but I would be surprised if they will do that.