Covered By Plan
Hello
Wife owns a corporation and provides no services to the corporation. Husband is the only one who receives a W2. They are wanting to establish a SEP IRA.
If we setup a SEP IRA at this point and make a contribution for 2020, the husband would be considered covered by a retirement plan for 2020 correct? I am trying to determine if he could also make a deductible IRA contribution. Their income is too high if covered by a retirement plan.
Thank you!
Permalink Submitted by Alan - IRA critic on Fri, 2021-03-05 22:52
No. For SEP IRA, the IRA owner is treated as an active participant for the year IN WHICH the contribution is made. Therefore, if a contribution is made this year for 2020 but no contribution was made in 2020, the active participation is for 2021, not 2020.