Age Limit for Deductible SEP IRS Contribution

Is there an age limit for deductible contributions to an SEP IRA? For Traditional IRAs I believe the age limit is the year you attain 70.5 years.

The IRS website says that if you are a company with a retirement plan, and you make SEP IRA contributions to your employees, you must also make the proper contribution to employees who are 70.5 years or older. They then go on to say the employee must still make his or her normal RMD.

Assume an employee over 70.5 years old with an IRA and who has to take a normal RMD of $15,000; and his employer makes a $10,000 contribution to his SEP IRA.

Does this employee take $15,000 from his IRA, calculated on the previous end of year balance, or does he have to take $25,000 from his IRA, so that the net amount of his IRA is still reduced by the $15,000.

If you are required to take mandatory distributions from your IRA, the year-end balance is used to compute the next year's required distribution. This would include computing the RMD for your SEP-IRA and your traditional IRA. If you are also an active participant in your employers's SEP-IRA, then employer contributions are still allowed regardless of your age.

Example: You are single, age 72 and have a traditional IRA and a SEP-IRA with your current employer. In 2014 your employer contributed $10K to your SEP-IRA. You were not allowed to contribute anything to your traditional IRA. At 12/31/14, the balance in your IRA is $100K and the balance in your SEP-IRA is $30K. You use the 12/31/14 balances to compute your 2015 RMD. Any employer contribution in 2015, has no impact on your 2015 RMD. It only will affect your 2015 year-end balance.