No. of Recommendations: 0
Subject: SEP-IRA
Author: Greetings, Nyfoolo, and welcome.

<<I recently started a new job in July and am therefore not yet able to contribute to my company's 401k plan. In addition to my salaried position I have also earned wages as an independent contractor over the past year. My question is that if I have already contributed to a traditional IRA, is it possible for me to set up a SEP-IRA (in the amount of 13.04% of wages received as an indepent contractor)?.
If so,how could I set one up and would it be tax deductible or deferred?>>

As I said in the message just prior to your query, virtually any broker can help you establish a SEP-IRA. You have until the date of filing for your return to do so, which means as late as 4/15/98 for a 1997 contribution to the SEP. In your case, two things will come into play. To achieve full deductibility of your SEP contribution, the IRA you already established for this year will not be deductible. Additionally, if you had other employment during the year in which you made deductible contributions to a profit sharing/401k plan, the combination of those deposits and your SEP-IRA contribution may not exceed the overall limits of 25% of your total compensation or $30K, whichever is less.

See IRS Pub 560, Retirement Plans for the Self-Employed, which you can obtain at: http://www.irs.ustreas.gov/prod/forms_pubs/index.html

Regards....Pixy
Print the post  

Announcements

The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement