SEP and Profit Sharing…
Client just sold his business (was contrib’g to his SEP-IRA) and now is working for the new owner as an employee. My client will be covered under a Profit Sharing Plan. My understanding is that he will no longer be eligible to add to his SEP-IRA…please verify.
Permalink Submitted by Alan Spross on Mon, 2011-03-28 22:28
He should still be able to make his SEP contribution, but only for the portion of the year before selling the business.
He can also make a traditional IRA contribution to the SEP IRA account under TIRA rules, which is different than a SEP contribution. But the TIRA contribution will probably not be deductible because he is covered by a retirement plan (the PS plan) and that limits the deduction to those earnings below a certain amount of modified AGI.