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Author: bergeronesq Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76106  
Subject: SEP plan Dilemma Date: 11/12/1999 2:48 PM
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Quick question. Became eligible in June of this year for my
company's
SEP plan (have no previous employer retirement plans) but am leaving
the
end of this month to take a new job at a new employer who has a 401k
plan. My current company, pursuant to their plan, is going to
contribute on my behalf to the SEP for the months I was eligible
(about
6). Question is what do I do with these funds since for all of next
year I will be a non participant in any plan and it won't be until
Jan.
2001 that I can get in on my next employers 401k. I currently have a
roth IRA but that's it. What would you suggest me do and what can I
do
with the SEP funds once I become eligible for my next employers 401k.
Thanks for your help and insight.
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15330 of 76106
Subject: Re: SEP plan Dilemma Date: 11/12/1999 4:02 PM
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Greetings, Bergeronesq, and welcome. You asked:

<<Quick question. Became eligible in June of this year for my company's SEP plan (have no previous employer retirement plans) but am leaving the end of this month to take a new job at a new employer who has a 401k plan. My current company, pursuant to their plan, is going to contribute on my behalf to the SEP for the months I was eligible (about 6). Question is what do I do with these funds since for all of next year I will be a non participant in any plan and it won't be until Jan. 2001 that I can get in on my next employers 401k. I currently have a roth IRA but that's it. What would you suggest me do and what can I do with the SEP funds once I become eligible for my next employers 401k.>>

The only thing you can do with the SEP is to transfer it to another type of IRA. Those monies cannot be transferred to a qualified retirement plan like a 401k. Therefore, IMHO you should leave it in place until your last contribution from your current employer is there, and then move it within the IRA shelter to whatever type of investment you desire.

Between now and when you can participate in the new 401k you will be limited to contributions to an IRA up to the $2K limit for the year. That contribution may or may not be deductible based on your filing status and AGI. For details, see our IRA area at http://www.fool.com/Money/AllAboutIRAs/AllAboutIRAs.htm. If you don't particpate in the 401k for the entire calendar year (that means every day), then the IRA contribution will be fully deductible.

Regards..Pixy

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Author: bergeronesq Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15331 of 76106
Subject: Re: SEP plan Dilemma Date: 11/12/1999 4:16 PM
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What if I already have a Roth that I have been contributing to this entire calendar year. Aren't I limited to 2k in either a Roth or a regular?

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15332 of 76106
Subject: Re: SEP plan Dilemma Date: 11/12/1999 5:08 PM
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Bergeronesq asks:

<<What if I already have a Roth that I have been contributing to this entire calendar year. Aren't I limited to 2k in either a Roth or a regular?>>

That's correct. You are limited to a grand total each year of $2K. That may all go into a Roth, it may go into a traditional IRA, or it may be split between both a Roth and a traditional IRA. You just can't exceed the $2K limit (or your earned income if lower). If you've met your IRA limit for 1999, then your next contribution must wait until January 1 or later of next year.

Regards..Pixy

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Author: bergeronesq Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15359 of 76106
Subject: Re: SEP plan Dilemma Date: 11/13/1999 6:10 PM
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So are you telling me that an employee who is in a SEP at his/her work cannot take advantage of IRAs if the contribution to the SEP is over 2k? That doesn't make sense. If my employer puts in all the money can't I just leave it there and then roll it over into an IRA or Roth without penalty and then still be able to put my own money up to 2k into whatever IRA version I want? I am getting more confused.

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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 15366 of 76106
Subject: Re: SEP plan Dilemma Date: 11/14/1999 9:51 AM
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Bergeronesq asks:

<<So are you telling me that an employee who is in a SEP at his/her work cannot take advantage of IRAs if the contribution to the SEP is over 2k? That doesn't make sense. If my employer puts in all the money can't I just leave it there and then roll it over into an IRA or Roth without penalty and then still be able to put my own money up to 2k into whatever IRA version I want? I am getting more confused. >>

No, no one is telling you that. What we're saying is that if you contribute $2K of your money to an IRA of any type in one year, then you have used your contribution limit for that year. Your employer's contributions to the SEP have no impact on your ability to contribute to that SEP-IRA, a traditional IRA elsewhere, or a Roth IRA. But once you make $2K in contributions in any combination to those IRAs (i.e., all in one or one-third in each), that's it. You may no longer use an IRA that year.

Regards..Pixy

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