My self-emplyd bus net income was $14762. TurboTax says I can contribute a max of $2,744 to a SEP. Can I contribute to my existing trad'l IRA INSTEAD of to a SEP? Max?

[SteveL · Accepted solution]

A SEP IRA allows a qualified self employed person to contribute up to $55,000 but limits this based on a maximum of 25% of income.  Just going by what you wrote it looks like Turbo Tax is telling you that you hit the limit at $2,744 based on your income for the business.  A Traditional or ROTH IRA has a lower max limit than a SEP but doesn't have the 25% max limit either, so yes, you should be able to contribute to a Traditional assuming your total income is below the total income limits set by the IRS.  Something to consider since your income was $14k if your total income is in a low tax bracket you might do the math to see if a ROTH makes sense.  This would allow your contributions to grow tax free so that later when you are presumably in a higher tax bracket your ROTH would be tax free!  This would make sense if you don't need the tax deferments now.  Good Luck!

[dmertz]

You have sufficient net profit to support contribute the maximum of $2,744 to a SEP IRA and to contribute the maximum to an IRA.

Your ability to deduct a regular traditional IRA contribution or make a Roth IRA contribution could be limited if you have a large amount of other income that would take your AGI above certain limits.