combining IRA to a SEP IRA & how is it classified?
I believe we can rollover an IRA into a SEP IRA…if this is true, does the SEP IRA count as a corporate retirement account or as an IRA when converting to a Roth IRA ? Client is planning to make non-deductible IRA contributions and then convert to a Roth.
Permalink Submitted by Alan Spross on Mon, 2010-06-07 20:25
A SEP IRA is just a traditional IRA that has employment based contribution rules. It can be converted to a Roth IRA and can also receive regular traditional IRA contributions in addition to SEP contributions. Therefore, client could make the non deductible TIRA contribution to the SEP IRA, and then convert it. Of course, an 8606 should be filed to document the non deductible TIRA contribution.
If client already has a TIRA account, the regular contribution can be made to either the SEP IRA or the TIRA. The TIRA can also be transferred into the SEP IRA if client wants to make just one conversion. Therefore there is considerable flexibility here with respect to the various transactions.
Permalink Submitted by Anonymous (not verified) on Mon, 2010-06-07 22:56
re: you write rollover
To avoid additional tax forms and reporting to occur, I would make sure you combine these accounts through an “asset transfer” and not “rollover”. Either will work, but I would not want the additional tax reporting under my SSN.
pko