Contributions to Sep IRA account for previous year

Submitted by Shekar Reddy on Sun, 2014-07-13 06:34

I own an S-Corporation and work through my company on contracts. I opened a “Sep IRA” account recently this year (2014).

1. Can I contribute to my new Sep IRA account for the tax year 2013 for the income I made in 2013? If so, is there a dead line for it?

2. How much max amount can I contribute?

3. Do I contribute as an employer or as an employee?

4. Is 401K better than Sep IRA for me and allow me to contribute more as an S-Corporation?

TIA



Submitted by Alan - IRA critic on Mon, 2014-07-14 04:04

  1. You can contribute for 2013 only if you filed an extension of your 2013 return. If so, the contribution can be made as late as 10/15/2014 for 2013.
  2. 25% of your W-2 wages
  3. The employer (S Corp) makes the contribution.
  4. A 401k is more complex to set up, but you can contribute more than a SEP the lower your wages are. After about 200k, the contribution limit is the same.

Submitted by Shekar Reddy on Thu, 2014-07-17 03:25

Yes, I filed for an extention of my 2013 return (business & personal taxes). However, I filed my returns in May already. Do I still have time to contribute to SEP-IRA for 2013 tax year for the income made in 2013 ? TIA

Submitted by Alan - IRA critic on Thu, 2014-07-17 04:35

Yes, but you must amend your return ASAP to report the correct SEP contribution. Here is what the IRS says:

Depositing and deducting contributionsWhen must I deposit the contributions into the SEP-IRAs?You must deposit contributions for a year by the due date (including extensions) for filing your federal income tax return for the year. If you obtain an extension for filing your tax return, you have until the end of that extension period to deposit the contribution, regardless of when you actually file the return.If you did not request an extension to file your tax return and did not deposit the SEP plan contributions by the filing due date for that return, you are not allowed to deduct any SEP plan contributions on that year’s return. The contributions may be deducted on the following year’s return.If you improperly deducted SEP plan contributions on your return, you must file an amended tax return as soon as possible.

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