I can't really advise on what you should do, but I can provide some useful information on SEP's and Traditional IRA's.
Retirement plans can be rolled over and consolidated into a SEP. This includes traditional IRAs, 401(k) plans, money purchase plans, profit sharing plans, defined benefit plans, 403(b) plans and Rollover IRAs.
Some of the advantages of a SEP account include a reduction in taxable income, tax-deferred compounding, high contribution limits (larger than other retirement plans), easy to administer, contributions tax deductible, and a practical way to save for retirement.
A disadvantage of a SEP is that there are No catch-up contributions if you're over the age of 50, there are no catch-up contributions like you see with IRAs and 401(k)s.
Traditional IRAs
- Retirement plan at work: Your deduction may be limited if you (or your spouse, if you are married) are covered by a retirement plan at work and your income exceeds certain levels. This is important to keep in mind as it limits your Traditional IRA deduction.
- For 2022, if you are covered by a retirement plan at work, your deduction for contributions to a traditional IRA is reduced (phased out) if your modified AGI i
- More than $109,000 but less than $129,000 for a married couple filing a joint return or a qualifying widow(er),
- More than $68,000 but less than $78,000 for a single individual or head of household, or Less than $10,000 for a married individual filing a separate return.
Modified AGI limit for certain married individuals increased.
If you are married and your spouse is covered by a retirement plan at work and you aren’t, and you live with your spouse or file a joint return, your deduction is phased out if your modified AGI is more than $204,000 (up from $198,000 for 2021) but less than $214,000 (up from $208,000 for 2021). If your modified AGI is $214,000 or more, you can’t take a deduction for contributions to a traditional IRA.
For SEPs you can contribute up to 25% of the employee's total compensation or a maximum of $61,000 for the 2022 tax year or $66,000 for the 2023 tax year, whichever is less. If you're self-employed, your contributions are generally limited to 20% of your net income.
The IRA contribution limits for 2022 are $6,000 for those under age 50. Those 50 or older can contribute an extra $1,000 through a "catch-up contribution," for a total of $7,000. You can make 2022 IRA contributions until the un-extended federal tax deadline (for income earned in 2022, which is April 18, 2023).
Click here for SEP Contribution Limits
Click here for Pub 560 Retirement Plans for small businesses.
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