Independently, I meet the eligibility requirements for a Roth IRA contribution, but I'm wondering my my SEP contribution or my spouse's employer plan contributions impact how much or whether I can put money into a Roth for 2013.
Generally speaking, you are not prohibited from making a Roth IRA contribution because of contributing to a SEP-IRA. The SEP-IRA contribution limits are independent of the combined traditional and Roth IRA limit of $5500 (plus $1000 if age 50 or over).
However, contributing to a SEP-IRA does lower the amount of your Adjusted Gross Income, so the change in AGI can affect your eligibility to contribute to the Roth IRA (usually increasing your eligibility).
Typo correction: I'm wondering if my SEP contribution or spouse's employer....
Generally speaking, you are not prohibited from making a Roth IRA contribution because of contributing to a SEP-IRA. The SEP-IRA contribution limits are independent of the combined traditional and Roth IRA limit of $5500 (plus $1000 if age 50 or over).
However, contributing to a SEP-IRA does lower the amount of your Adjusted Gross Income, so the change in AGI can affect your eligibility to contribute to the Roth IRA (usually increasing your eligibility).
This was exactly my situation. By funding a little extra into my SEP, my AGI fell below the income limits for contributing to a Roth for this year. I just wanted to be sure there wasn't a catch.
Yah, I am self employed and had the same question. Thanks for the answer.
So...I am self employed and contributed $5,500 to my ROTH IRA (under 50) and I am wondering if in addition, I can contribute to a SEP IRA? If so, is there a chart out there that details what amount I can put into my SEP IRA?
So...I am self employed and contributed $5,500 to my ROTH IRA (under 50) and I am wondering if in addition, I can contribute to a SEP IRA? If so, is there a chart out there that details what amount I can put into my SEP IRA?
So...I am self employed and contributed $5,500 to my ROTH IRA (under 50) and I am wondering if in addition, I can contribute to a SEP IRA? If so, is there a chart out there that details what amount I can put into my SEP IRA?
IRS Pub 560 provides information to determine the amount that you can contribute to a SEP-IRA based on your income from self-employment: <a rel="nofollow" target="_blank" href="https://www.irs.gov/publications/p560/ch02.html#en_US_2015_publink10008828">https://www.irs.gov/publications/p560/ch02.html#en_US_2015_publink10008828</a>
Please correct this is a double negative or the first words "Generally speaking,no, " are confusing. The answer is yest you can contribute to both within the limits set by the governement. Question is if someone takes max on Roth does that effect SEP ? I don't think so, but it would if the IRA was a traditinal since if would lower earnings.
This is from the IRS website so do your own research because this directly contradicts the answer given which is now also readible straight from Google but seems to be wrong based on this from IRS.gov
"Because a SEP-IRA is a traditional IRA, you may be able to make regular, annual IRA contributions to this IRA, rather than opening a separate IRA account. However, any dollars you contribute to the SEP-IRA will reduce the amount you can contribute to other IRAs, including Roth IRAs, for the year."
NeonLotus, the text you quoted from the IRS website is incomplete and is therefore misleading, not contradictory. The SEP contribution by a self-employed individual reduces the amount of compensation available to support an IRA contribution. It does not directly reduce the amount of an IRA contribution that one can make. If one has net earnings from self-employment greater than or equal to the maximum permissible IRA contribution after subtracting the deductible portion of self-employment taxes and the amount of any self-employed retirement deduction such as that resulting from a SEP contribution, the amount that one is permitted to contribute to an IRA is not reduced. The limitation with regard to compensation is that the regular IRA contribution plus the deductible self-employed retirement contribution plus the deductible portion of self-employment taxes is not permitted to exceed net profit from self employment.