Comments on: SEP-IRA and 401K–Can you contribute to both?

By: SEP IRA Contribution Limits (2009 & 2010) – The Dough Roller

SEP IRA Contribution Limits (2009 & 2010) – The Dough Roller — Thu, 22 Oct 2009 15:38:32 +0000

[...] is a retirement account designed for self employed individuals and owners of small businesses. An SEP IRA works similar to a traditional IRA or 401(k). Contributions are generally 100% tax deductible and investments grow tax deferred. Withdrawals are [...]

By: Diana

Diana — Thu, 10 Sep 2009 16:06:58 +0000

If I have a small business and I already have a SEP established can I start a nwe 401(k) plan as well? I don’t want to contribute to both in the same year, but am I even allowed to start a new plan if the other exists?

By: Laura

Laura — Thu, 23 Apr 2009 16:19:31 +0000

Why do I have to take in my contributions to my employer sponsored 401k to reduce my contributions to my self employed sponsored SEP? In first case I am the employee and in the second case I am the employer. It seems like I only have to take into account all contributions if all contributions are made by the same employer.

By: 2009 Sep IRA Rules and Limits | Good Financial Cents

2009 Sep IRA Rules and Limits | Good Financial Cents — Mon, 23 Mar 2009 03:04:32 +0000

[...] most self-employed individuals, the simplicity and effectiveness of a SEP IRA make it a great way to save for retirement and reduce your taxbill even further, especially if [...]

By: Jeff

Jeff — Tue, 24 Feb 2009 09:58:48 +0000

If you have a 401k and profit sharing plan that takes you to the max of $46,000, can you still contribute to a SEP_IRA for additional self employed income?

By: adam

adam — Fri, 23 Jan 2009 05:00:23 +0000

This is helpful, but one remaing question: Does the emmployer match count toward the total 401(k) + SEP limit, or just what the employee contributed? Could somone please answer this questions

By: Soyab Husein

Soyab Husein — Wed, 24 Dec 2008 02:41:36 +0000

I have a small business and pay myself a salary (W2) and contribute 25% to a SEP IRA.
In 2008 my children get an adhoc salary (ages 17 and 19 and on W2).
Also, in 2008 I have an employee who also has another job with Company X where he participates in a 401K plan.
I’m led to beleive that all employees on the payroll have to recieve the same %age of SEP IRA contributions.
Since my employee is already in a 401K plan can I also contribute to a SEP IRA for him?
If not, is there a legal obligation for me to compensate the employee and can I continue to contribute to my SEP IRA? Also, do I have to contribute to my childrens SEP IRA?
Your answers will really be appreciated.
Thanks.
Soyab

By: Alan

Alan — Sat, 11 Oct 2008 05:24:37 +0000

I’m having a hard time grasping the maximum contribution part, even after reading through IRS Pub. 560. Maybe you can help if I supply details. Let’s say I make $40,000 at a regular job, and make $2,000 from blogging. I contribute $4,000 to my regular work 401k and $5,000 to a Roth IRA. How much can I contribute to a SEP-IRA?

By: DR

DR — Thu, 07 Feb 2008 11:27:21 +0000

JR, I would recommend that you take a look at IRS Pub. 560, which you can download from a link in the article. As you’ll see in Pub. 560, a common law employee cannot set up his or her own retirement plan such as an SEP from that income ( you have self-employed income too, which is a separate matter). Whether you are a common law employee depends on several factors, which are described in the publication.

By: JR

JR — Tue, 05 Feb 2008 15:35:12 +0000

Thank you for publishing the information. I do have a question however. I already have a SEP, have my own business and also work as contracted labor for another company. This other company issues me a W-2 and offers no benefits, i.e, the contract labor classification. Can I contribute up to 20% of my contracted wages from the W-2 as well as my net from Schedule C into my SEP, or must I open up another IRA, which doesn’t make sense since I won’t have the advantage of pooling all my retirement funds? Thank you.