Message Font: Serif | Sans-Serif
No. of Recommendations: 0
I could only feel better about this if I knew that you stumbled on to the gem of the 100% safe harbor here in the tax folder. But even if you found out about it somewhere else, at least you got the word.

I honestly can't say where I first heard about the safe harbor rules, but I know you've hammered the idea home in this group.

It's certainly earned income. And it's certainly subject to SE taxes. But I don't believe that it's eligible to establish a SEP contribution.

That's what I was afraid of. Can't really complain too much -- as an employee I can already tax-defer $12500 per year between a 401(k) and an IRA. But it doesn't hurt to ask.

Does seem a bit unfair that something can be considered self-employment income for tax purposes, but not for retirement purposes. But terms of art in any field don't necessarily make linguistic sense to outsiders.

<rant>The real problem is the law that lets people with the exact same income put dramatically different amounts of it in tax-deferred accounts, depending on where they got that income. In particular, employees of companies with no 401k plans are truly screwed -- they get the same $2000 IRA contribution limit as everyone else (granted, theirs is likely to be deductable, but with the Roth around that's no longer such an advantage), and no other options. Guess I should quit whining here and start bribing politicians^W^Wmaking campaign contributions.</rant>

Print the post  


In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
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.
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.