For phaseout purposes-Spouse SEP
If a husband is a business owner with a SEP IRA balance and no new contributions, does that count as an employer plan for phaseout purposes for the wife to make a deductible traditional IRA contribution?
If a husband is a business owner with a SEP IRA balance and no new contributions, does that count as an employer plan for phaseout purposes for the wife to make a deductible traditional IRA contribution?
Permalink Submitted by Alan - IRA critic on Tue, 2021-12-14 21:34
Husband is an active participant for the year IN WHICH he makes a SEP contribution. If he makes a SEP contribution this year, whether for 2020 or 2021, as an active participant it will trigger a MAGI phaseout of spouse’s IRA deduction.
Permalink Submitted by John Foster on Mon, 2021-12-20 18:51
The comment “if he makes a SEP contribution this year, whether for 2020 or 2021” is “this year” a calendar year or is it the contribution year ie. Jan 2021-April 2022?
Permalink Submitted by Alan - IRA critic on Tue, 2021-12-21 00:29
“This year” is the calendar year in which the contribution is actually made, ie. 2021. Do not consider which year the contribution is for.