SEP catch-up contributions
Can a self-employed person (age 55) with no employees make catch-up contributions to his existing SEP? (non-SARSEP).
Our tax software allows it, but I can’t see in the IRS Publ 560 where it expressly allows them.
Can a self-employed person (age 55) with no employees make catch-up contributions to his existing SEP? (non-SARSEP).
Our tax software allows it, but I can’t see in the IRS Publ 560 where it expressly allows them.
Permalink Submitted by Alan Spross on Thu, 2008-03-20 04:35
No catch ups, unless it’s a SARSEP. Of course, a regular traditional IRA contribution can be made to a SEP IRA account including the catch up, but the contribution must be recorded as such. Since the SEP is considered an employer retirement plan, the TIRA contribution may not be deductible.
Permalink Submitted by Denise Appleby on Thu, 2008-03-20 10:41
…and , if the SEP contribution is being made this year for last year, the participant would be considered an active participant for this year.
Therefore, (if the SEP contribution is made this year for last year) it would not affect the participant’s ability to deduct an IRA contribution made for last year.
See http://www.retirementdictionary.com/active-participant.htm
The software is probably covering all bases. Does it ask if the SEP is a salary deferral SEP? If it does, and you responded that it is not, it should not give the option of allowing catch-up to the SEP…unless, as Allan noted, the catch-up is for a regular IRA contribution .