SEP contribution in addition to traditional IRA contr.
Client is under IRS audit. Client is self employed making current SEP contributions to limit (lets say $50K Schedule C profit and $10K SEP contribution) Client also made traditional IRA deductible contribution of $5K into a seperate IRA account. Auditor is saying he can’t do that both. I don’t think auditor is correct. Your own SEP is the same as being an active participant in an employer plan as if you were a W-2 employee and you can do deductible IRA contributions as long as your under the income limits. Am I correct or is the auditor correct?
Need answer ASAP!!! Thank you
Permalink Submitted by mk foss on Thu, 2012-06-14 21:34
The individual is covered by an employer plan by having the SEP. A deductible IRA is available if he meets the rather low AGI limits (56k-66k 2011 if single) (169k-179k if married and only one is covered).
Permalink Submitted by Steve Hayes on Fri, 2012-06-15 12:54
As I thought. Thanks for your response. Goes to show that there are a lot of IRS auditors in need of further education!