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[[I was laid off from my job in Feb. 1997, so paid into a 401k for two months of the tax year. I later
became employed as a consultant on a job-shop basis (e.g. no benefits of any kind) by two
different employers. It is my understanding that SEP IRA's were created for people like
job-shoppers and consultants who do not have any 401k available to them. Does my 2 months
participation in a 401k plan disqualify me from having a SEP IRA?]]

If you were pain on a consulting basis (i.e., via Form 1099 and NOT via Form W-2), you'll need to file Schedule C to report your business income and deductions. Your SEP contribution will be based solely on your net business income. The fact that you participated in your 401k for 1997 will not disqualify you from a SEP.

For additional information on self employed retirement plans, see IRS Publication 560 at the IRS web site.

TMF Taxes
Roy

SPECIAL NOTE: I try to answer as many questions as I can each week, and I generally select those that have not been asked before. If you don't get a detailed answer to your question, it is probably because my time is so limited during tax season, or because it has already been asked and answered in this folder in the past, or because it has been discussed in the Taxes Frequently Asked Questions area. In order to visit the Taxes FAQ area, go to the Fool's School area (http://www.fool.com/school.htm) and check out "Other Features" in the list box, OR you can jump directly to the Taxes FAQ area (http://www.fool.com/school/taxes/taxes.htm). Additionally, if any references were made to the IRS Web Site, you can get there by pointing your web browser to (http://www.irs.ustreas.gov)

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