Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 0
I searched to see if this has been answered before. I didn't see it in the search results.

The scenario is this: Employee with 401(k) earns a salary high enough that his personal IRA contribution deduction is almost entirely phased out. In addition to his fulltime job, he's starting his own business part-time.

Can he deduct SEP-IRA contributions strictly according to his SE income? Or do the income limits which restrict deductibility of his personal IRA contributions also restrict any SEP-IRA contributions he may make as a sole proprietor?

Also, will a SEP-IRA contribution affect the amount he can contribute to his personal Roth IRA?
Print the post Back To Top
No. of Recommendations: 0
I searched to see if this has been answered before. I didn't see it in the search results.

The scenario is this: Employee with 401(k) earns a salary high enough that his personal IRA contribution deduction is almost entirely phased out. In addition to his fulltime job, he's starting his own business part-time.

Can he deduct SEP-IRA contributions strictly according to his SE income? Or do the income limits which restrict deductibility of his personal IRA contributions also restrict any SEP-IRA contributions he may make as a sole proprietor?


The employER-side SEP-IRA contribution is unaffected by anything other than his SE income.

Also, will a SEP-IRA contribution affect the amount he can contribute to his personal Roth IRA?

The employEE-side IRA contributions (traditional and/or Roth) are calculated and limited independently of the employER-side SEP-IRA contribution.

Ira
Print the post Back To Top
No. of Recommendations: 0
The scenario is this: Employee with 401(k) earns a salary high enough that his personal IRA contribution deduction is almost entirely phased out. In addition to his fulltime job, he's starting his own business part-time.

Can he deduct SEP-IRA contributions strictly according to his SE income?


Yes.

Also, will a SEP-IRA contribution affect the amount he can contribute to his personal Roth IRA?


It reduces AGI, so it can only increase amount of Roth eligibility(not past maximum).
Print the post Back To Top