Pub 527, p. 14 lists a number of deductions that must be added back into AGI to calculate MAGI for purposes of the special $25,000 passive-loss allowance. The items added back include the business portion of self-employment tax and contributions to traditional IRAs (among others).
Question: for purposes of calculating this MAGI, are SEP contributions considered traditional IRA contributions (and thus added back)?
Since it is permissible to roll a traditional IRA into a SEP, it seems to me that a SEP is a traditional IRA. On the other hand, because the SEP is funded by the employer, and since qualified plans are not in the list (e.g. money contributed to a 401(k) remains excluded from the MAGI calculation), including SEP contributions in the calculation of MAGI for this purpose would provide a strong incentive to choose a different retirement plan for a small business, yet I don't see this point touted by people promoting Solo 401(k)s over SEPs.
Does anyone know whether the SEP contributions need to be added back for this MAGI?
Question: for purposes of calculating this MAGI, are SEP contributions considered traditional IRA contributions (and thus added back)?
Since it is permissible to roll a traditional IRA into a SEP, it seems to me that a SEP is a traditional IRA. On the other hand, because the SEP is funded by the employer, and since qualified plans are not in the list (e.g. money contributed to a 401(k) remains excluded from the MAGI calculation), including SEP contributions in the calculation of MAGI for this purpose would provide a strong incentive to choose a different retirement plan for a small business, yet I don't see this point touted by people promoting Solo 401(k)s over SEPs.
Does anyone know whether the SEP contributions need to be added back for this MAGI?