SEP IRA

- P
- Peter
  
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posted
17 years ago

Thu, Mar 15, 2007 5:47 AM

On my W-2 box 13 states that I have a retirement plan. My company setup an SEP for me and I'm wondering if I can contribute to it. Turbotax is only allowing me to contribute $1545 towards my schedule c but I also have a larger income from my W-2. This is the first year I received a 1099-MISC and probably the last year. I would like to contribute more money but have it deduct some money from what I owe the irs. I tried putting in numbers into the IRA form just to see what would happen and it said I could take $4000 but it would be a nondeductible contribution. I guess if its nondeductible I would be better off with a ROTH IRA. What should I do? Thanks, Pete

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- P
- Phil Marti
  
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Vote on answer
posted
17 years ago

Fri, Mar 16, 2007 5:31 PM

No. Only employers can make SEP contributions based on W-2 wages.

For the Schedule C income you wear both the employer and employee hats for SEP purposes. That's why you can make a SEP contribution based on the Schedule C income.

Absolutely. A Roth instead of a nondeductible traditional is one of the few no-brainers in tax law.

-- Phil Marti Clarksburg, MD

- B
- brownie
  
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posted
17 years ago

Sat, Mar 17, 2007 2:35 AM

For the company SEP, only the company can make contributions to the plan and the amount contributed is fixed by the plan. If you also set up a SEP-IRA as a self-employed individual, contributions are limited by your SE income. If you get no tax benefit today from a traditional IRA, the ROTH IRA is more advantageous (Tax free is better than tax deferred).