Traditional IRA vs SEP IRA Contribution
Assuming that based on Schedule C income and MAGI, a client qualifies for exactly a $7,500 SEP IRA contribution or a $7,500 Traditional IRA contribution, is it ALWAYS better for a client to do a $7,500 Traditional IRA contribution since both the SEP/Traditional IRA contribution are a tax deduction but the Traditional IRA contribution won’t limit the QBI deduction like a SEP IRA would?
Permalink Submitted by Alan - IRA critic on Sat, 2024-04-20 02:58
Yes, however if the client made a SEP contribution in 2023 (for 2022), the TIRA contribution (although it is now too late for a 2023 TIRA contribution if not made earlier) may not be deductible as the client would be an active participant for 2023. In that case, a Roth contribution should be considered if MAGI is not too high.