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JamieGuy sez:

Angchu wrote:

<< 2) Is there a maximum that can be contributed towards a Roth IRA, SEP and 401(k) combined? Does that matter whether it's an employer or employee contribution? >>

TMF Pixy responded:

<< It does not affect your ability to use a Roth IRA, so you may contribute up to $2K per year to that, too ... In short, you may participate in all three vehicles subject to the limits previously specified. >>

This is similar to my situation, but different enough that I'd like some more clarification. Forgive me if I'm beating a dead horse :-)

I am a participant in my company's SEP as well as having a traditional (soon to be Roth) IRA. I have about 9% of each paycheck deducted and put into the SEP, but my employer did not match any funds this year. My AGI is less than $30,000, so I'm permitted the full IRA contribution of $2,000.

According to Publication 590, I can put up to 15% of my income into the SEP IRA. But $2K + SEP contribution comes to more than 15% of my salary. My employer's bookkeeper/accountant says that my total contribution to all retirement accounts can't be greater than 15%. This sounds contrary to your statement above; is there something more complicated here, or is he just wrong?

You employer's bookkeeper/accountant is incorrect. As the employee participating in your employer-provided SARSEP (a SEP with a salary reduction election to enable you to contribute part of your pay to the SEP on a pre-tax basis), you may elect to contribute up to 15% of your annual pay to that plan. Your contribution does not affect your ability to also contribute - and possibly deduct - another $2K to your traditional IRA or to a Roth IRA. For a traditional IRA contribution to be deductible in full, though, your AGI must be $30K or less as a single filer or $50K or less as a joint filer.

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