SEP IRA AND Traditional Roth IRA .........Can you have both? (accounts, income)
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let's say that i'm self employed and made 300k last year. Can i contribute the max, 6500 to a Traditional IRA, AND 25% of my income (upto 52k) to a SEP IRA Simultaneously?
in other words, total contribution = 6500 + 52k = 58.5k
Yes, you can. But, at 300k, you're not going to be able to deduct your traditional IRA contributions.
You can do a backdoor Roth, but because of your SEP, the conversion will be partly taxable. (Probably mostly taxable, but can't say for sure since I don't know what else you have).
Yes, you can. But, at 300k, you're not going to be able to deduct your traditional IRA contributions.
You can do a backdoor Roth, but because of your SEP, the conversion will be partly taxable. (Probably mostly taxable, but can't say for sure since I don't know what else you have).
Thanks.
The 300k was hypothetical and perhaps a bad figure (i wanted to emphasize that 25% of the profit is 52k max). The actual Net profit is let's say 60k.
Can the person have 6500 in a traditional, and 25% of the remaining amount (ie. 60k-6.5k) in a SEP IRA?
This is what i found on the IRS website. Can someone translate this for me please? :-)
what do they mean when they say "If the SEP-IRA permits non-SEP contributions, you can make regular IRA contributions"?
what determines if the SEP-IRA permits non-SEP Contributions or not?
If I participate in a SEP plan, can I also make tax-deductible traditional IRA contributions to my SEP-IRA?
If the SEP-IRA permits non-SEP contributions, you can make regular IRA contributions (including IRA catch-up contributions if you are age 50 and older) to your SEP-IRA, up to the maximum annual limit. However, the amount of the regular IRA contribution that you can deduct on your income tax return may be reduced or eliminated due to your participation in the SEP plan.
This is what i found on the IRS website. Can someone translate this for me please? :-)
what do they mean when they say "If the SEP-IRA permits non-SEP contributions, you can make regular IRA contributions"?
what determines if the SEP-IRA permits non-SEP Contributions or not?
If I participate in a SEP plan, can I also make tax-deductible traditional IRA contributions to my SEP-IRA? If the SEP-IRA permits non-SEP contributions, you can make regular IRA contributions (including IRA catch-up contributions if you are age 50 and older) to your SEP-IRA, up to the maximum annual limit. However, the amount of the regular IRA contribution that you can deduct on your income tax return may be reduced or eliminated due to your participation in the SEP plan.
That's just saying you can put your SEP contributions (up to your limit) + your traditional IRA contributions into your SEP, if your custodian allows it. But, this does not change your ability to deduct your traditional IRA contribution. The rules are the same whether you stuff the money into your SEP or stuff the money into a traditional IRA.
As far as the IRS is concerned, your SEP, your SARSEP, your SIMPLE, and your traditional IRA are all one pot of money. So they don't care if you put your traditional IRA money into your SEP, but your custodian might not want to fiddle with tracking the separate contribution limits.
That's pretty cool, I didn't know that was an option until now.
Thanks.
The 300k was hypothetical and perhaps a bad figure (i wanted to emphasize that 25% of the profit is 52k max). The actual Net profit is let's say 60k.
Can the person have 6500 in a traditional, and 25% of the remaining amount (ie. 60k-6.5k) in a SEP IRA?
in other words 6500 + (25% * 53500) = $13,375
A SEP is an employer plan. So yes, you can still contribute to your own traditional or Roth IRA, up to the max, subject to the same rules as say a person with a 401k.
A SEP is an employer plan. So yes, you can still contribute to your own traditional or Roth IRA, up to the max, subject to the same rules as say a person with a 401k.
I've been trying to desperately find an IRS link that says you can contribute 'fully' to both a SEP IRA and a Traditional IRA, but haven't been able to find it. Can you provide a source for your comment above please?
Under the link "Who Can Open a Traditional IRA?", it says:
Who Can Open a Traditional IRA?
You can open and make contributions to a traditional IRA if:
You (or, if you file a joint return, your spouse) received taxable compensation during the year, and
You were not age 70½ by the end of the year.
You can have a traditional IRA whether or not you are covered by any other
retirement plan. However, you may not be able to deduct all of your
contributions if you or your spouse is covered by an employer retirement plan.
See How Much Can You Deduct, later.
Under the link "Who Can Open a Traditional IRA?", it says:
Who Can Open a Traditional IRA?
You can open and make contributions to a traditional IRA if:
You (or, if you file a joint return, your spouse) received taxable compensation during the year, and
You were not age 70½ by the end of the year.
You can have a traditional IRA whether or not you are covered by any other
retirement plan. However, you may not be able to deduct all of your
contributions if you or your spouse is covered by an employer retirement plan.
See How Much Can You Deduct, later.
thanks. that's essentially what i saw too. but 1. what does this mean: However, you may not be able to deduct all of your contributions if you or your spouse is covered by an employer retirement plan. and 2. it doesn't say you can contribute fully to both accounts....does it? (my fear is that even if you can have both, you can't contribute fully to both.....similar to if you have both a roth and a traditional ira. the max is stil 6500 regardless of the split between the two accounts.)
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