IRA contributions
I have a client who has been self-employed and has done a SEP IRA contribution for many years. He is now an employee of a company that has no retirement plan. He still has some 1099 income, but would be able to contribute much more to an Traditional IRA for himself and his spouse. If he chooses not to do a SEP contribution, can he make two deductible IRA contributions even if his income is over the $194,000?
Thanks for you help.
Permalink Submitted by William Tuttle on Fri, 2016-03-25 17:52
Traditional IRA contributions are for the relevant tax year, even if made before the tax filing date of the following year. On the other hand you are considerd an “active participant” of a SEP IRA the year the contribution is actually made. For example, if your client made a SEP IRA contribution in 4/15 for the 2014 tax year, they are an active participant for 2015 and deductible traditional IRA 2015 contributions would be subject to income limitations.