SEP and Roth Contributions based on Schedule C Earnings

Submitted by John Ray on Fri, 2023-09-08 11:36

Can an individual make a contribution to a SEP IRA for the full amount and also make contributions to a Roth IRA for himself as well his spouse who does not work. The Schedule C earnings are approximately 20k. The taxpayer has no other earned income.



Submitted by David Mertz on Fri, 2023-09-08 12:07

  • $20,000 of net profit from self-employment is sufficient to support maximal Roth IRA contributions for each spouse in addition to a maximal SEP contribution for 2023 if at least one of the spouses is under age 50 at the end of 2023.  However, with no other compensation to support the contributions, the sum of the deductible portion of self-employment taxes, the SEP contribution and the Roth IRA contributions is not permitted to exceed net profit from self-employment, so if both spouses are over age 50, at least $20,176 of net profit would be needed for both spouses to be able to make maximal Roth IRA contributions.
  • To be able to make a spousal Roth IRA contribution the spouses must file jointly.
  • To be able to make maximal Roth IRA contributions for 2023, modified AGI must be under $218,000 filing jointly.


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