If myW2 job has a 403b and my employee and employer contributions are $58,000 (max) for 2021 can I still contribute to a Sep-IRA for 2021 if I have a side gig consulting solo employee job too (1099 payments)? I keep getting different answers from different accountants since 403 b is different under IRS tax code than a 401 K. Today I was told I could contribute to a Sep-IRA.
No, you are not permitted to contribute to a SEP IRA. With respect to a 403(b) you are considered self-employed and your retirement contributions are limited to $58,000 with respect to all of your self-employment income. You've already reached that limit with the contributions to the 403(b).
This is different than the case where the W-2 employer's plan is instead a 401(k). Contributions to a 401(k) in that case are not considered to be self-employed retirement contributions, so if this was instead a 401(k), you could make a SEP contribution even if the contributions to the 401(k) totaled $58,000.
It's not surprising that you have gotten different answers because it's easy to forget the special provision in the tax code (CFR 1.415(f)-1(f)(1)) that makes the 403(b) contributions be treated as contributions made by you as self-employed, Since both the contributions to the 403(b) and the SEP would both be treated as being made by you as self-employed, the combined amount is subject to a single $58,000 limit.
No, you are not permitted to contribute to a SEP IRA. With respect to a 403(b) you are considered self-employed and your retirement contributions are limited to $58,000 with respect to all of your self-employment income. You've already reached that limit with the contributions to the 403(b).
This is different than the case where the W-2 employer's plan is instead a 401(k). Contributions to a 401(k) in that case are not considered to be self-employed retirement contributions, so if this was instead a 401(k), you could make a SEP contribution even if the contributions to the 401(k) totaled $58,000.
It's not surprising that you have gotten different answers because it's easy to forget the special provision in the tax code (CFR 1.415(f)-1(f)(1)) that makes the 403(b) contributions be treated as contributions made by you as self-employed, Since both the contributions to the 403(b) and the SEP would both be treated as being made by you as self-employed, the combined amount is subject to a single $58,000 limit.
Thank you for answering this question because I was told multiple times a Sep-IRA was different but clearly it is not.
again thanks
A SEP-IRA is certainly different, but because both would be treated to be plans under the same employer (you as self-employed), the $58,000 per-employer limit applies. Also, because you are considered to be self-employed for the purpose of the 403(b), you are not permitted to have a separate SEP plan that is based on Form 5305-SEP for the plan agreement. Any SEP plan would have to be based on some other prototype SEP agreement, but the $58,000 limit on the combined contributions would still apply.
my 403(b) is a large nonprofit. You mean that the IRS considers 403 (b) as owned by the employees not as self employer per se. The sep ira would have been for a consulting side gig. If I come under the 58,000 ( or now $61,000) this year, I can open a Sep IRA and put in the difference is my understanding of the rule.