Hi i'm self employeed and paid myself a $24000 salary under a s-corp entity. after business expenses i then pay myself the rest of profit as distribution, which is around $25000. i contribute 25% of my earned income( 6k) to my sep ira account. i was wondering if i can also make roth ira contribution afterward or is there no double dipping? TIA pete
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SEPs have no effect on your ability to make regular IRA contributions, Roth or traditional. See IRS Publication
590.-- Phil Marti Clarksburg, MD
Per IRS Q & A
Can a person make a contribution to a SEP-IRA and a Roth IRA, too? Yes, you can make a contribution to a SEP-IRA and a Roth IRA. See Chapter 2 of Publication 590, Individual Retirement Arrangements (IRAs), for the requirements to contribute to a SEP and a Roth IRA. However, your SEP IRA contribution and Roth IRA contribution can not be made to the same I
Getting back to basics for a moment. You say "you" contributed 25% to the plan. I hope you mean that the SEP IRA is established BY THE corporation and that the corporation contributed to it. The corporation then takes the deduction on page one of 1120S. Second part; then yes, you may also contribute to a ROTH IRA, assuming you meet all other requirements. All these things I, and my S corp, do.
ChEAr$, Harlan Lunsford, EA n LA
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