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Ptsurmr asks:

Assume a self-employed individual with 170K+ earnings makes the max SEP-IRA contribution of $25,500 (15%). It is my understanding (reading publication 560) that only $22,176.50 (13.0435%) of this amount is deductible. The remaining $3,323.50 is a non-deductible contribution. Is this correct?

For someone who grosses exactly $170,000 in a year that's correct for the deductible contribution. There is no such thing as a nondeductible SEP contribution. Therefore,that person's deductible SEP contribution would be limited to $22,176.50. But for someone who nets $170K or more, the full contribution of $25,500 would be allowed.


Alternatively, if the same self-employed individual were to make a SEP-IRA contribution of $22,176.50, this entire amount would be deductible. Is this correct?

That's correct given the person grosses the $170K exactly.

Regards..Pixy
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