Taxpayer is self-employed with business profit of $30,000 in 2007. He is under 50 years old and has already made $4,000 contribution to his traditional IRA. Can he still make contribution to his SEP IRA based on the plan percentage of his business income?
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Yes and maybe
Yes, he can contribute to a SEP-IRA for the year 2007, as long as the contribution is made by the due date for filing the owner's return ... including extensions.
If he contributes to a SEP on his own behalf, he may not qualify to also contribute to a traditional IRA, as the SEP is considered to be coverage by an employer's plan for this purpose.Roland Slugg
"I do what I can." -
Are you talking about the phase out rule there? I understand he is considered an active participant if he is already covered by a SEP (or an employer's plan). So I take what you said to mean that if his AGI is under the $52,000 (he is single), he can contribute $4,000 to his traditional IRA and also contribute the allowable amount to his SEP based on his plan contrbution rate. Am I right?Originally posted by Roland Slugg View Post
Thanks.Comment
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Here's a related question.
If he bases the SEP on the total of his SE income minus 1/2 the SE tax, is there any earned income left over to put into another IRA? (Assuming no other jobs.)JGComment
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