No. of Recommendations: 0

Pixy, thanks for your response. I've been researching this a little more, and along with pubs 560 and 590 from the IRS I've also found the Vanguard University a useful resource and wanted to post a link for anyone else looking into this.

From this (and pub 560) I understand that "In the case of self-employed individuals, annual SEP contributions are limited to the lesser of $30,000 or 13.04% of their net self-employment earnings." In other words limited to a maximum of $20,864 due to the $160K cap.

Not that I'm even remotely close to $160K of self-employed earnings, but I am close to $10K in my 401(k), so it is very interesting to learn that I could setup a SEP-IRA for my self-employed earnings and potentially get some more tax deferral from this, in addition to a ROTH or regular IRA.

I had thought I had capped out with $10K in 401(k) and $4K in ROTH IRAs (for my wife and I), but now it looks like I'll be able to squeeze out a little more with 13.04% of my net self-employment earnings. That may only be a few hundred dollars, but every cent counts.

Does this sound right?

Indeed it is correct. You can get the maximum benefits of both individually as long as in combination you don't exceed the 15% or $24K limit of the combined income.


Print the post  


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.
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.