topic Re: SEP IRA contribution in Retirement tax questions

SEP IRA contribution

blueliner — Mon, 27 Jul 2020 19:18:16 GMT

As a W2 employee, I have a SEP IRA dating back to when I owned a business. Can I continue to contribute to this account to reduce my W2 taxable income?

Re: SEP IRA contribution

dmertz — Mon, 27 Jul 2020 19:56:12 GMT

All SEP contributions must be made by your employer to a SEP plan established by that employer. Except for a SARSEP established before 1997, all SEP contributions are employer contributions are employer contributions. All SARSEP employee contributions must be made by payroll deduction and deposited by your employer.

Some IRA custodians allow regular personal IRA contributions to be made to an IRA that is designated as a SEP-IRA, but since contributions to a SEP-IRA are by default reported as SEP contributions it's still best to make regular personal traditional IRA contributions to a separate account to avoid confusion and incorrect reporting of the contribution on Form 5498 by the IRA custodian. Whether or not your regular personal traditional IRA contribution will be deductible will depend on whether or not you or your spouse is covered by a workplace retirement plan, your modified AGI for the purpose and your filing status.

Re: SEP IRA contribution

Opus 17 — Mon, 27 Jul 2020 20:08:04 GMT

@dmertz wrote:

All SEP contributions must be made by your employer to a SEP plan established by that employer. Except for a SARSEP established before 1997, all SEP contributions are employer contributions are employer contributions. All SARSEP employee contributions must be made by payroll deduction and deposited by your employer.

When you were self-employed, you were the employer, so you (as employer) could contribute to an SEP IRA.

Now, as a W-2 employee, you can no longer contribute to that SEP IRA account since you aren't the employer any more. If your new employer doesn't have a retirement plan, you might help them set one up. Or if they have a plan, you are limited to the options they offer.

Re: SEP IRA contribution

blueliner — Mon, 27 Jul 2020 22:12:03 GMT

Thank you.

Re: SEP IRA contribution

blueliner — Mon, 27 Jul 2020 22:12:55 GMT

Thanks.