SEP-IRA Funding
Client made a 2014 Roth IRA contribution then later realized he was ineligible
2014 Roth contribution was subsequently re characterized as a 2014 traditional IRA contribution
The investor (self employed) – now wants to use his 2014 traditional IRA contribution to help fund a 2015 SEP-IRA contribution. Is this permitted? Assuming it is – how is this transaction reported?
Thank you
Permalink Submitted by Alan - IRA critic on Tue, 2015-08-11 18:35
Recharacterization cannot be used to change IRA contributions between a SEP and a non SEP contribution. The TIRA contribution could be returned with allocated earnings, and a new SEP contribution made using the proceeds. If the 2014 TIRA contribution was deducted, the return would have to be amended, or if the contribution was non deductible, the 8606 reporting it would need to be amended.