SEP/IRA contributions by Notary

Submitted by Michael D Meeks on Wed, 2018-09-26 15:09

Net Notary Service income is not subject to Self-Employment Tax. Can the net income be used to contribute to a SEP/IRA since the net income is not subject of SE Tax?



Submitted by William Tuttle on Wed, 2018-09-26 19:20

Only compensation can be the basis for employer retirement plans and their contributions. No net earnings from self-employment, no SEP IRA can be adopted, let alone contributions be made.

Submitted by Michael D Meeks on Fri, 2018-09-28 16:59

thanks for your rely.Just for clarification…you are saying that Net Notary Fee Income (on Sch C) is not compensation for SEP/IRA purposes. do you have a IRC or reg or revnue ruling reference?  

Submitted by William Tuttle on Sat, 2018-09-29 04:51

If it is self-employment income reported on a Schedule C/C-EZ. It is compensation whether you are exempt from SE taxes or not.

Submitted by Michael D Meeks on Sat, 2018-09-29 20:03

Yet ProFX will not calculate a SEP/IRA for net income (Sch C). They will not give me their source for this.Ugh!

Submitted by William Tuttle on Sat, 2018-09-29 22:23

  • I can not find any reason in 26 Code 219, 401, 408, 414 and 415 why this is not considered self-employment income and eligible compensation for employer retirement plan contributions.
  • Maybe Alan S. or one of the other experts can verify.
  • I have no idea why ProFX is not calculating a SEP IRA contribution.
  • If someone else verifies I am correct, can you calculate it yourself and Override?

Submitted by Bruce Steiner on Sun, 2018-09-30 02:23

  • See Section 1402(c)(1):  https://www.law.cornell.edu/uscode/text/26/1402. 
  • Also see page 5 of the instructions to Form 1040, Schedule SE:  https://www.irs.gov/pub/irs-pdf/i1040sse.pdf (column 2, paragraph 2:  https://www.irs.gov/pub/irs-pdf/i1040sse.pdf. 
  • Bruce Steiner

 

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