Contributing to both IRA and SEP-IRA. How much is deductible?

[mpalTAX]

I'd like to maximize my income tax deductions by contributing to retirement accounts. I am employed by a company (W-2) and also run a sole proprietor freelance business on the side. I do not participate in my employer's retirement account. I have a SEP-IRA (via my freelance business) as well as a personal IRA account. Can I contribute to both accounts? Is there a total deductible limit or is each account calculated separately?

[MaryK4 · Accepted solution]

Yes, you can contribute to both a SEP-IRA and a personal IRA (Traditional or Roth) in the same tax year. Because you are both an employer (sole proprietor) and an employee (W-2), these accounts are subject to separate limits, though your ability to deduct the personal IRA contribution depends on your income. 

[mpalTAX]

Thanks for the swift reply  @MaryK4  ! Since I am an "employer" due to my freelance business, does this mean the IRS consider me "covered by a retirement plan at work"? (note that my W-2 Employer does not offer a retirement plan)

[dmertz]

A SEP contribution for 2025 makes you covered by a workplace retirement plan for 2025.