SBO enthusiastic SEP IRA contribution
I have a small business owner client that front loaded (January, 2014) his SEP contributions for 2014. He contributed $10k to his account. He anticipated that he would have taxable earnings in excess of $120k for the year. Things have changed in his business and he may not have any taxable earnings this year. Since he has not filed his 2014 taxes…no deductions taken…can he withdraw the $10k prior to filing without it being considered a taxable withdrawal? He has approximately $500 in earnings from this contribution. Thanks!
Permalink Submitted by Alan - IRA critic on Wed, 2014-08-06 19:22
The client can request a return of contribution in the same manner as other IRA accounts. The SEP custodian must calculate the allocated earnings on the contribution and return the net amount. Any earnings will be subject to tax and early distribution penalty if applicable. This can be done up to the due date of the 2014 return plus extensions.