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Author: nanandpaul Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76237  
Subject: SEP IRA Max Contribution? Date: 3/4/2005 2:48 PM
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I am considering an offer from a company that is offering a 25% yearly contribution to a SEP IRA. I have no experience with this type of IRA, but the searching the MF web site, I learned that the maximum contribution has a limit of 15% of the annual salary. Can somebody clear this up for me?

Thanks,
Paul
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Author: ziggy29 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44984 of 76237
Subject: Re: SEP IRA Max Contribution? Date: 3/4/2005 3:14 PM
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>> I am considering an offer from a company that is offering a 25% yearly contribution to a SEP IRA. I have no experience with this type of IRA, but the searching the MF web site, I learned that the maximum contribution has a limit of 15% of the annual salary. Can somebody clear this up for me? <<

It used to be 15%; recent tax law changes increased this to 25% (I think this was in 2002).

For 2005, it's the lesser of 25% of salary or $42,000 ($46,000 if age 50+).

#29

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Author: nanandpaul Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44985 of 76237
Subject: Re: SEP IRA Max Contribution? Date: 3/4/2005 3:37 PM
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Thanks!

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Author: phalanx001 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44986 of 76237
Subject: Re: SEP IRA Max Contribution? Date: 3/4/2005 7:08 PM
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Sorry to piggyback on someone else's thread, but I have a related question. The maximum percentage (or dollar amount) of SEP IRA contributions is the lesser of 25% or $42,000. But is the percent maximum applied on a per paycheck basis?

In other words, say I'm the sole shareholder and my S. Corp. has $5,000. Can I put $2,500 into my SEP IRA and pay myself a salary of $2,500 (i.e. 50% of my paycheck, forgetting taxes for the moment) as long at it does not take me over the ANNUAL percentage of 25% or 42k?

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Author: TwoCybers Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 44990 of 76237
Subject: Re: SEP IRA Max Contribution? Date: 3/5/2005 2:35 PM
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The answer to your example is no - that I am sure about. I believe, when you figure the net profit from your business you can take up to 25% of the net less 1/2 of the selfemployment tax. If you use TurboTax this calculation is done for you automatically -- you will get asked if you want to make the maximum contribution.

Gordon
Atlanta

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Author: buzman Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 45000 of 76237
Subject: Re: SEP IRA Max Contribution? Date: 3/6/2005 9:57 PM
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For 2005, it's the lesser of 25% of salary or $42,000 ($46,000 if age 50+).

I don't think that is correct. The catchup only applies to salary deferrals, SEPs are not funded from salary deferrals.



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