I have a W2 income where I contribute to 401K. I also have an LCC (1099). Can I contribute to SEP IRA?

af142700 — Wed, 13 Nov 2024 17:04:05 GMT

I offer consulting services to companies through my LLC entity in CA. I am trying to understand my options to minimize my tax burden on this income by contributing to SEP IRA or any other retirement plan for self-employed individuals.

Re: I have a W2 income where I contribute to 401K. I also have an LCC (1099). Can I contribute to SEP IRA?

Cindy4 — Wed, 13 Nov 2024 17:23:07 GMT

Yes, you can contribute to both an employer plan and a SEP IRA, as long as they are not both controlled by the same employer. Here are some great resources regarding Self-Employment retirement options. There are limits on what you can contribute to a SEP IRA. SEP IRA contributions allow for the lesser of either 25% of your compensation or $69,000 for 2024. For self-employed individuals, compensation is considered the lesser of your net earnings from self employment minus half of your self-employment tax, and then subtract the contribution for yourself to the plan.

IRS rules:

https://www.irs.gov/retirement-plans/how-much-can-i-contribute-to-my-self-employed-sep-plan-if-i-participate-in-my-employers-simple-ira-plan#:~:text=Assuming%20you%20are%20not%20also,the%20maximum%20to%20both%20plans.

Everything you need to know about SEP IRAs:

https://blog.turbotax.intuit.com/self-employed/self-employed-heres-everything-you-need-to-know-about-sep-iras-44305/

IRS calculation methods:

https://www.irs.gov/retirement-plans/self-employed-individuals-calculating-your-own-retirement-plan-contribution-and-deduction

Other options for Self-Employed Retirement Plans:

https://blog.turbotax.intuit.com/self-employed/can-the-self-employed-have-a-401k-31297/

Hope this helps!

Cindy

topic I have a W2 income where I contribute to 401K. I also have an LCC (1099). Can I contribute to SEP IRA? in Business & farm

I have a W2 income where I contribute to 401K. I also have an LCC (1099). Can I contribute to SEP IRA?

Re: I have a W2 income where I contribute to 401K. I also have an LCC (1099). Can I contribute to SEP IRA?