IRA contribution in addition to SEP

[oceanlovin'ea]

S Corp with one employee can contribute 25% of employees wages to a SEP IRA account. Is there anything that prohibits the employee from contributing the maximum contribution to an IRA account?

Even if I mark that he is covered by a plan (which I don't think this applies) the program still allows the IRA deduction. It seems to me that it would be allowed but I can't find that statement in writing anywhere so am looking for confirmation.

Thanks

Linda F

[JohnH]

You are required to check the "Retirement Plan" box on the W-2 if his corp contributes to a SEP for him. Then the income limitations kick in for his filing status in determining how much (if any) he can contribute to a regular IRA.

[oceanlovin'ea]

Thanks

Thanks JohnH. I appreciate your reply. That makes sense.

Linda F

[New York Enrolled Agent]

S Corp with one employee can contribute 25% of employees wages to a SEP IRA account. Is there anything that prohibits the employee from contributing the maximum contribution to an IRA account?

Even if I mark that he is covered by a plan (which I don't think this applies) the program still allows the IRA deduction. It seems to me that it would be allowed but I can't find that statement in writing anywhere so am looking for confirmation.

Thanks

Linda F

I think your choice of words needs to be considered.

Virtually anyone who has compensation can contribute to an IRA. I'm not sure why you suggest the taxpayer is not covered by a plan when he has an employer funded SEP.

It appears you're asking if that contribution would be deductible as a reduction in gross income. That's a different question.

[Snaggletooth]

Ceiling on Deferrals

Is there not a ceiling on amounts that can be deferred placed on the individual? No matter how many plans exist...

[New York Enrolled Agent]

Is there not a ceiling on amounts that can be deferred placed on the individual? No matter how many plans exist...

The limitation in §415 does not apply to traditional IRA contributions.