Social Security Taxes due for SEP IRA Contributions & Withdrawels

[TreeFarmGuy]

I am a small business LLC with only one person working myself, and I am over 60years old.

Good morning Tax Community

If I make a contribution to a SEP IRA and later withdraw the funds do I ever pay the 15.3% social security taxes on the contribution or the withdrawal?

Examples: I contribute $10,000 of business income that would would normally get reported on schedule C as income which I would be charged the 15.3% social security tax in addition to Federal & State taxes. But since I contribute it to a SEP IRA I avoid all three for these  (15.3% social security, Federal, & State taxes). Correct ?

And once I withdraw these funds I only pay Federal, & State taxes?

So I have avoided the 15.3% social tax completely. Is there any time limit the money has to be held in the SEP IRA account before I can withdraw it, since I am already over 60?

Thanks

[MinhT1]

There is no minimum time limit for holding the SEP-IRA money in the account.

The 10% early withdrawal penalty only applies if you are younger than 59 1/2 at the time of withdrawal.

Please read this IRS document for more information.

[VolvoGirl · Accepted solution]

Sorry not correct.  The 10,000 SEP does not come off your schedule C profit so you still pay the 15.3% SE tax on it.  It is an adjustment to regular income on Schedule1 line 16 which goes to 1040 line 10.