Hello, I was wondering if I can contribute to a 401k, a ROTH IRA and a SEP IRA in the same tax year? This is my situation: I currently contribute to my 401k, I have maxed my ROTH IRA for this year, and I am hoping to be able to open up a SEP IRA due to being hired as a 1099 freelancer/ contractor this year. I am thinking that I should be able to also contribute up to 25% of the income made from the self employment 1099 income, but I have not been able to find an answer on this.
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As long as your 401(k) plan is with an employer other than your self-employment business, your contributions to the 401(k) plan do not affect your ability to contribute to a SEP IRA with your self employment income. However, your maximum SEP contribution is not 25% of self-employment income. A self-employed individual must do a special calculation. The maximum SEP contribution is 20% of your net earnings from self-employment. Your net earnings from self-employment are your net profit from self-employment minus the deductible portion of the self-employment taxes.
To make your Roth IRA contribution you must have sufficient earnings left over, either from the employer with the 401(k) plan or from self-employment earnings, after making the 401(k) elective deferrals and the SEP contribution. You must also be under the modified AGI limit for being eligible to make the Roth IRA contribution.
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