Assuming you have a sole proprietorship that is independent of your day job and have a SEP IRA connected with that sole proprietorship- are you allowed to distribute the tax deductable amount into a traditional IRA and a SEP-IRA, in addition to the TIAA/CRAF contribution through work?
IRA
Apr 11, 2009
1 Replies
What you do at work doesn't affect either you SEP contribution or your traditional/Roth IRA contribution. Because you are covered by a retirement plan, any traditional IRA contribution's deductibility depends on your income. See Publication 590.
Assuming you're under 70 1/2 you can, in addition to what you do at work:
- Contribute ,000 (,000 if you were 50 on 1/1/2009) to a traditional or Roth IRA or a combination of the two. AND
- Make your maximum SEP contribution, which is deductible. That maximum is 20 of (your Schedule C bottom line minus the adjustment to income for self-employment tax on page 1 of the 1040.) See Publication 560.
-------------- Phil Marti, VITA Volunteer Clarksburg, MD
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