My client made a contribution to his Sep Ira in 2004 for 3,000. This was to be an IRA contribution not because of a business but because of his wages. The IRS does not seem to like this and say it should be on line 32 of form 1040. Can you not make an IRA contribution to a SEP Ira and deduct it on line 25?
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No
If this is for 2005, you might be able to recharacterize it from a SEP to an IRA. -
No
SEP is only for self-employed income, not for wages on a payroll.Originally posted by veritasComment
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A SEP-IRA contribution in made by the employer/business (ie: Corp, LLC, Partnership, or self-employed business).Originally posted by John of PA
The business bases the contribuion upon a percent of wages on the businesses payroll or in the case of a 1040 Sch-C filer (no wages), the self-employment net income. But again, it is technically the business and not the individual that is making the contribution therefore "wages" from other sources are not considered for the SEP contribution calculation.Comment
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Sep-ira
is an IRA that has been changed to ALSO allow SEP contributions. The employer will send his SEP contributions to that account if the employee designates it and the employee can make individual IRA contributions to it also-either deductable or not deductable....Comment
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Jon,
Do you have any info handy? It was in the back of my mind also that an employee could make a personal contribution to a SEP IRA.Comment
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A SEP-IRA is a "plan" setup by the employer... not a cash or investment account as such (even tho some accounts call themself SEP-IRA's). The employer SEP-IRA "plan" can make the contribution to any IRA the employee wishes if the IRA plan will accept the contribution. I have never seen an IRA account that would turn down a contribution.Originally posted by veritasComment
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Llc Member
You guys are confusing me.
An LLC member whose k-1 shows s/e earnings can make a sep contribution based on that figure without the LLC setting up a plan & involving other LLC members.
He can take the deduction on line 28 (1040) correct?Comment
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A individual with self-employment income is in business and therefore can have a SEP-IRA plan. If the individual in his business has employee he has to include them in the plan and make contributions for them. An LLC with a K-1 means the LLC is a partnership or a S-corp and does not file 1040 Sch-C. If the LLC had the plan it would have to make contributions for all employees and members. A member of the LLC must be concerned with determining if the LLC is required to provide contributions for all employees/members if any such member is going to do an individual SEP-IRA.Originally posted by stern100Comment
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so an LLC member with s/e income on k-1 cannot just take the sep deduction on the 1040 without regard to other s/e members or LLC employees.
What if no employees on LLC?
Is there any circumstance where a llc member with s/e income on k-1 can take sep deduction on line 28 1040?Comment
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A self-employed person (LLC member) may deduct a SEP-IRA contribution on his 1040. However, the contribution, altho made by the individual member, is actually/technically made by the self-employed business/employer and therefore consideration must be given to employees of any and all related businesses so as not to discriminate. Businesses/employers make SEP-IRA contributions (42,000± limit) and individuals make IRA contributions (4,000± limit).Originally posted by stern100Comment
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thats what I'm looking for, Thanks again Old Jack.Comment
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