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I work for a major corporation with a 401K plan. I have nearly maxed out my contributions this year and will probably do so next year. I also have a sole proprietorship which should be profitable next year. Will the IRS let me contribute 20% of my self employment income to a SEP in addition to my contributions through my other employer?

Yes. You can also make an IRA contribution of top of those two. Deductibility of a traditional IRA contribution would be subject to the AGI phaseouts.

See IRS Publications 560 and 590.

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