SEP and Traditional IRA
Can an individual who is self employed have a SEP and and IRA? Since the business makes the contribution, not the individual is he considered an active participant. I read somewhere that he can have both as long as they are put in separate accounts, not the same account as the business SEP IRA. This way the business could put up to the max. and the individual could do the IRA.
Permalink Submitted by Alan Spross on Wed, 2009-08-26 19:03
Yes, both types of contributions can be made, and the regular IRA contribution can be made to a separate IRA account or to the SEP IRA as long as it is identified as a regular (non SEP) contribution. However, the SEP contribution will affect the deduction for the regular contribution since the SEP contribution makes the taxpayer a retirement plan active participant. A Roth IRA contribution can also be made instead of a TIRA regular contribution, or the contribution can be split between TIRA and Roth.
The amount of the actual regular contributions are not directly affected by the amount of the SEP contribution.
Permalink Submitted by IVY DAVIS on Thu, 2009-08-27 13:24
On a W-2 when there is a SEP there is no X put in the retirement box, per the instructions. The employee is not allowed to contribute, only to a SARSEP. What makes him a active participant.
Permalink Submitted by Alan Spross on Fri, 2009-08-28 02:35
There should be a check in Box 13. See p 13 and 14 in the attached link to the W-2 Inst for 2009 (no change from prior years):
http://www.irs.gov/pub/irs-pdf/iw2w3.pdf