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Subject:  Re: I have an IRA, what next? Date:  9/25/1998  1:44 PM
Author:  shess Number:  5635 of 100488

xxdustyxx wrote:
<<I often do freelance work, 1099misc, that amounts to between $2000-$5000 a year. Am I eligible to contribute to Keoghs/SEPs/Simple/etc.>>

Sure, either a SEP-IRA or Simple-IRA should work for you. I'd go with a Simple, unless you plan to greatly increase your freelance work. With a Simple, you should be able to deductably contribute _all_ earnings up to $6k.

[Note, I don't have a Simple - and thus haven't put this to the test. I have a SEP, which allows contributions by percentage (13.5%) of taxable income. The above paragraph is my understanding of how Simple works, though.]

<<I've looked at the retirement plans page on this site, but can't seem to deduce whether the SEP/Simple would be included in "the total yearly $2000 contribution to all IRAs".>>

No, the SEP/Simple contribution is not counted as part of the $2k. Those plans are effectively employer-sponsered plans - it just so happens that you're the employer _and_ the employed!

If you contribute to both employer-sponsered and personal IRAs, your deductable personal IRA contributions may be limited. Last time it applied to me, I was single, and below $25k taxable income had no limits, above $35k allowed no deductability on the personal IRA, and in between the personal IRA deductability phased out at $200 per $1000 of income. Those taxable income numbers have hopefully risen since then, and are also different if you're filing jointly.

At worst, you should be able to dump the entire 1099 income (up to $6k) into a Simple, and put $2k of other income into a Roth (assuming you're within _those_ income limits).


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