I have a 401k maxed out with my day job. I have a side-business earning around $40k/year. I contributed $7k to a SEP-IRA. Is that $7k deductible? If so, sounds too good to be true considering I am deducting $16,500 from my 401k.
Is SEP-IRA deductible if 401k maxed out?
Mar 30, 2010
1 Replies
You are always entitled to a deduction for a profit-sharing contribution, and a SEP is a type of profit-sharing plan, though not a "qualified" plan. The $16,500 in the 401(k) is not profit-sharing, it's salary reduction. By the way, if you want, you can also put another $5,000 into the SEP-IRA as a non-deductible traditional IRA contribution (I'm assuming your income is too high for a Roth IRA contribution). I applaud you for having the financial foresight to put that much aside for your retirement.
Join the Discussion
Have something to add? Share your thoughts — no account required.
Didn't find your answer?
Ask the community — no account required