SEP IRA

Posts Tagged ‘sep’

Question: As a small business owner, can I have a Solo 401k and SEP IRA at the same time?

I am currently employed full-time at a company but I have my own cleaning business on the side. I want to save money in 2007 while lowering my tax bill so I wanted to know if I can have a Solo 401k and a SEP IRA at the same time?

Answer: No. SEP-IRAs are not allowed if you have a 401k program, or even if you have access to a 401k program and dont avail yourself of it.

Part 1 of Solo 401k vs. Self Directed IRA – Intro & Eligibility

Question: Can I roll a SEP IRA into a Roth?

I want to roll a SEP IRA into a Roth to make it easier to manage. I don’t have a problem paying tax on the amount rolled over. But I don’t want it to affect the annual amount I can contribute to the Roth which is $4,000. Is this possible?

Answer: For ease of rollover,
check with those who have your IRA now.

Rollovers usually are tax free transactions.

check out: – www.irs.gov – for all free forms and instructions, plus use their search sections – to get your specific questions answered.

GOD bless.
CPA-retired

Using your Roth-IRA or SEP-IRA for Real Estate Investment

Question: What should I invest in besides an IRA?

I already have a Roth IRA with mutual funds between American Balanced Fund and Vanguard Star (balanced) Fund with about 15K between the two. Next year I am no longer going to contribute to the American Fund because of the loads and instead put that $$ into Vanguard’s 2035 Target Retirement Fund, which is more stock oriented rather than balanced. I am 36 years old.

What is another thing I should be investing in for the long term (not an IRA unless a SEP-IRA) that would be “tax friendly”? Maybe a tax-managed fund? I don’t have the option of a 401k. Part of my income comes from self employment, that’s why I was considering a SEP-IRA. Any specifics regarding a good tax-managed fund though? Thanks

Answer: You should first choose a tax sheltered option such as a SEP-IRA and maximize your Contribution to that account. Because your investment grows tax deferred, you need not worry about tax efficiency and simply focus on lower costs. Vanguard 2035 Target Retirement Fund sounds good because of its low cost structure and it automatically rebalances as you approach your retirement age.

Beyond that, if you want to save in a non-tax sheltered account (i.e. taxable account), then there are tax managed separate accounts, but those are expensive and would make sense only for high-networth individuals. So, I would recommend low cost index mutual funds or ETFs. ETFs are more tax efficient than mutual funds. You could also include some municipal bond funds in your portfolio as the interest income is tax free. If you invest in munis from your state, you also get shelter from state taxes.