SEP and IRA contribution limitations.
Client wants to maximize contributions to both his SEP and to his Traditional IRA. Can he still get full deductions for both 2010 contributions? Ed Slott’s September Newsletter Retirement Plan Contribution Limitations matrix left out the IRA header, so I am hoping nothing has changed.
Permalink Submitted by mk foss on Mon, 2010-09-27 20:54
If the individual is self-employed and has a profit, he can make a deductible SEP contribution. For an IRA deduction he must meet the criteria for someone covered by an employer plan. That would be adjusted gross income less than $89k if married or less than $56k if single. A partial contribution to the IRA is deductible if adjusted gross income is less than 20k higher if married or less than 10k higher if single.
The nondeductible IRA contribution is available with sufficient earned income.
All of this assumes that the person has not reached age 70-1/2. Once that age has been reached, only the SEP contribution is deductible.