SEP IRA
Do SEP IRA contributions by a business owner affect deductibility of Traditional IRA contributions? In other words, are you considered to be covered by a retirement plan at work if you contribute to a SEP as a business owner?
Do SEP IRA contributions by a business owner affect deductibility of Traditional IRA contributions? In other words, are you considered to be covered by a retirement plan at work if you contribute to a SEP as a business owner?
Permalink Submitted by Alan Spross on Wed, 2008-10-01 21:16
Yes, you are considered covered. Therefore, the TIRA contribution may not be deductible. The same applies for a SIMPLE IRA.
For a Roth contribution, the only limits that apply are the modified AGI limits for regular Roth contributions.
Permalink Submitted by Denise Appleby on Wed, 2008-10-01 21:45
Note also that you are considered covered for the year that the SEP contribution is deposited to the SEP IRA. For instance, if the SEP contribution is deposited in 2008, you are considered active for 2008 regardless of whether the SEP contribution is for 2007 or 2008.
For details, see http://www.retirementdictionary.com/articleActiveParticipantStatusCanYou…