Deductible IRA with Max SEP Contribution?
I am self-employed with no employees, and my AGI is $250,000. I have set up a SEP IRA and have made the max $45,000 contribution in 2007. I am considering doing the same in 2008 (the max contribution of 46k).
Question: Can I also make a *deductible* IRA contribution of $5,000 for 2008?
Permalink Submitted by Alan Spross on Tue, 2008-06-10 19:22
No.
Participation in a SEP IRA constitutes coverage under an employer retirement plan. This causes your regular IRA contribution deduction to be subject to income limits that are much lower than yours. Therefore, you cannot take a deduction nor can you contribute to a Roth IRA with an income this high. The only option remaining is a non deductible traditional IRA contribution and you would file Form 8606 to report it if you choose to go that way.