OK, a bit of a challenge for you experts.
I'm self-employed. I have been for years. I have not been employed by the company that issued me a one time NQSO distribution via W-2 for several years. They did withhold FICA though. As I am self-employed (sole proprietor) and there is no reasonable definition of employee that applies to me, I think I should be able to make a SEP-IRA contribution as my own employer using the W-2 income. It makes little sense to me that the company's mechanism of distribution would define my employment status.
When I use the Adjusting Self Employment Income mechanism (in the Self-Employed Retirement Section under Income/Expenses) and enter my W-2 amount in the Your Non-Farm Adjusted box my proposed SEP contribution applies perfectly.
Is this permissible? Or am I sending up a giant audit flag?
Thanks so much for your insight. Any alternative solutions would also be appreciated.
