SEP IRA

Archive for April, 2005

Question: Calculating SEP-IRA Contribution limit?

I’m a tad confused as to how to calculate my 2010 SEP-IRA Contribution limit from all self-employed income sources. From what I’m reading on IRS website and from other sources SEP-IRA contributions are limited to 20% of NET income from self-employment (for simplification-sake.)

My problem is that half-of the time I was working as a self-employed through a business (Schedule-C) and some via an agency, still self-employed though as an independent contractor not as an employee. I will have some business deductions on Schedule-C. Do I add up all my income and then take my business deductions to come up with the NET amount on which I’m to base my SEP-IRA Contribution limit? Or…?

Answer: You are more than a tad confused. If you had any taxes withheld from the pay from an agency, then you were an employee. That means your SEP-IRA Contribution can’t include that income. Also, any expenses that were related to the money earned as an employee don’t go on your Schedule C. They belong on Form 2106 which feeds to your Schedule A. The expenses are part of a class that are only deductible to the extent that all such expenses exceed 2% of your Adjusted Gross Income.

I hope this helps.
Gary

Iraklis poreia sto kentro tis athinas 09/06/2010 vouli ira-10

Question: i am self employed and i contribute to SEP IRA.i would like to know is it possible to contribute to roth?

Answer: Yes you can contribute to Roth if your MAGI is under 99K for single and 156K for joint.

SEP or Simplified Employee Pension is one of the best retirement plan for a self employed business owners. There are many more benefits for opening a SEP retirement plan account rather than just a simple retirement account. We will discuss the benefits of SEP accounts or SEP Plans below. SEP rules are also tailored for business owners and that is why the Contribution limits of a SEP account under the SEP rules are much higher than average traditional retirement accounts. A SEP retirement plan is also known as a Sep Ira or Sep Ira Retirement Plan.

What is a SEP Account?

A SEP account or the Sep Ira account is a retirement account for business owners or self employed individuals. A SEP account or Sep Ira works similar to traditional IRA retirement plans in terms of contributions and distributions. However the SEP rules are more favorable for self employed business owners than traditional IRA accounts. You can learn more about SEP accounts, SEP rules and a SEP retirement plan by reading some of the following SEP retirement plan resources.