Can I contribute to a Traditional IRA and a SEP-IRA, and maybe a solo 401K, for 2022?

[concoa]

CIRCUMSTANCES:
I am self-employed and 62. The last few years, weren't great. But, I saved and funded my personal, traditional IRA with the previous year's savings.

2022 EXAMPLE: I earned and saved in 2021. In January of 2022, I contributed the max amount (base + catch-up = $7000) to my traditional IRA. I do this so it has as much time to grow as possible. Basically, I don't wait to see how much money I make for the year and use left-over. I pay my retirement first.

However, 2022 turned out to be a much better year for my business. I need additional solutions to tax management and retirement savings for 2022. (Unfortunately, I was not thinking about taxes until after December 31, or I'd have started a solo 401K.)

So, my questions are:
#1) Can I use an SEP-IRA  (as a self-employed "employer" provided retirement plan) along with having already maximized my personal IRA as an individual?

Are there any rules preventing me from contributing to both for the same tax year?

#2) Can I still contribute the max of each to each?

(My  rate of $7000 to traditional IRA and 25% of net income to SEP-IRA) Or, is the total annual contribution different? Like IRS's favorite, "the lesser of line #..." rules? The rates for the contributions are calculated completely differently. BUT, they are both IRA's???

#3) AND, can I open a solo 401K for the same year as having a SEP-IRA?

According to reading irs.gov, if I use a 5305-SEP prototype for the SEP-IRA, I can have multiple retirement plans. But, are there any rules that prevent me from fully contributing to a SEP-IRA and a solo 401K at the same time?

I am aware I would not be able to make employee contributions to the 401K since the year has ended. But, solo 401K "employer" contributions are allowed until tax filing. I just don't know if there is a rule I haven't found that prevents using both retirement plans and employer contributions for the same year. Or a rule, that explains contribution limits to do this.

My TurboTax Personal and Business should arrive tomorrow. First time user and very excited to try it. But, I've got to prepare my finances before I start. Help???

[fanfare]

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[concoa]

I understand. I do have income that covers the traditional IRA contribution. My circumstances include the fact that I've already fully funded the traditional IRA in January. It's the self-employed SEP-IRA and the solo 401K's that can't be calculated until the year's net income is calculated.

[fanfare]

once your tax return is complete in all other respects, 

the Maximize SEP contribution command will tell you how much you can put in your SEP.

you may want to leave some room by contributing less than that exact amount.

@concoa 

[Snoopy70]

@concoa I believe I know what you are asking and I posted the same or very similar question a few days ago. From my understand, the answer to questions 1 and 2 is Yes, provided your total contributions added together don't exceed the annual maximum limitation. Not sure what that is but you can do a quick search.

I believe question 3 is the same thing I asked in my post. I've found conflicting information as to whether you can have both a SEP and a Solo 401k owned by the same business. From my research, your business can definitely have both provided you use a prototype SEP plan agreement other than Form 5305-SEP that explicitly permits both plans to be maintained simultaneously. 

It's also my understanding that you can make employer contributions and employee contributions until your tax filing deadline, including extensions. The Solo 401k must be opened by 12/31 in order to make contributions to it in the previous year (i.e. opened by 12/31/22 in order to makes 2023 contributions that can be deducted in 2022).

I made the mistake of opening a Solo 401K with Fidelity with an existing SEP 5305. I've made a total of $4000 employee contributions for the previous year and I'm not sure how to rectify this. I could probably contact Fidelity and have them attribute them to 2023, BUT I need more deductions for 2022. So, I'm trying to find out what I need to do to allow this.

I was hoping to get some advice here, but I think my best bet is to schedule an appointment with a financial advisor.

Hope this helps, but be sure to confirm what I've said!

[dmertz]

Unless a filing extension was requested, it's now too late to establish a SEP plan or a solo 401(k) plan to receive contributions for 2022.

If you did request a filing extension, you can establish either a SEP plan or a solo 401(k) plan, but generally not both.  The contribution to a SEP plan is an employer contribution and you can make the same employer contribution to a solo 401(k) plan, although possibly limited if you make elective deferrals or Roth contributions to the solo 401(k) plan that you cannot make to a SEP plan.  In other words, there is no tax benefit to establishing a SEP plan over a solo 401(k) plan because you can always contribute more the the solo 401(k) than to a SEP plan (unless you have no net profit, in which case you couldn't contribute to either).

Due to changes in the tax code, you have until the due date of your tax return to establish a 401(k) plan and make contributions.  However, if you already maintained a SEP plan for 2022 based on Form 5305-SEP, you are not permitted to also establish a 401(k) plan for 2022.