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Old 07-31-2014, 08:12 AM
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Can I make these SEP contributions in 2014?

I am married and my income for 2014 will be @ $260K, of which $220K will be W2 income through my employer and the rest with be schedule C self employment income.

I have a retirement plan at work which is in the corporate trust FBO me and rolls over to me when I leave that job.

In 2014, the amount that will be put into that work account will be the maximum of $57,500 (profit sharing, 401K, and catch up IRA since I am > 50 years old). The corporation make the bulk of the contribution and I make a small portion out of my paycheck.

My wife and I will each have @ $20K each in self employment income for 2014 (schedule C on tax return). I receive a 1099 year end for as an independent contractor that is not affiliated with my primary employer. Hers is self reported from a cash business with no 1099.


We each have established SEPs.

She can obviously contribute to her SEP for 2014 since she has no other retirement plan.

My questions are:

1. The limit for my wife is 20% of the profit. We don't need the expendable cash at this time. Would we be better off establishing a 401K for her since she could then contribute greater than 20% (up to $23.5K) for 2014.

2. For me, am I allowed to contribute to my SEP with respect the $ earned in my self-employment business in 2014? In doing so, I would then exceed the $57.5K total deferral achieved via my W2 income?

Also, if I can make a self employment deferral, would I be better off establishing a 401K to up the limit towards $23.5K

In essence, I would then have 2 sources of wage deferral:

(profit sharing/401K/catch up IRA) though my W2 income

and

(SEP or 401K) though my schedule C income


Would that be legal with the current tax code?



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Old 08-04-2014, 03:09 PM
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Join Date: Oct 2010
Posts: 5,236
Quote:
Originally Posted by crw41 View Post
I am married and my income for 2014 will be @ $260K, of which $220K will be W2 income through my employer and the rest with be schedule C self employment income.

I have a retirement plan at work which is in the corporate trust FBO me and rolls over to me when I leave that job.

In 2014, the amount that will be put into that work account will be the maximum of $57,500 (profit sharing, 401K, and catch up IRA since I am > 50 years old). The corporation make the bulk of the contribution and I make a small portion out of my paycheck.

My wife and I will each have @ $20K each in self employment income for 2014 (schedule C on tax return). I receive a 1099 year end for as an independent contractor that is not affiliated with my primary employer. Hers is self reported from a cash business with no 1099.


We each have established SEPs.

She can obviously contribute to her SEP for 2014 since she has no other retirement plan.

My questions are:

1. The limit for my wife is 20% of the profit. We don't need the expendable cash at this time. Would we be better off establishing a 401K for her since she could then contribute greater than 20% (up to $23.5K) for 2014.

2. For me, am I allowed to contribute to my SEP with respect the $ earned in my self-employment business in 2014? In doing so, I would then exceed the $57.5K total deferral achieved via my W2 income?

Also, if I can make a self employment deferral, would I be better off establishing a 401K to up the limit towards $23.5K

In essence, I would then have 2 sources of wage deferral:

(profit sharing/401K/catch up IRA) though my W2 income

and

(SEP or 401K) though my schedule C income


Would that be legal with the current tax code?
I am married and my income for 2014 will be @ $260K, of which $220K will be W2 income through my employer and the rest with be schedule C self employment income.
I have a retirement plan at work which is in the corporate trust FBO me and rolls over to me when I leave that job.In 2014, the amount that will be put into that work account will be the maximum of $57,500 (profit sharing, 401K, and catch up IRA since I am > 50 years old). The corporation make the bulk of the contribution and I make a small portion out of my paycheck.My wife and I will each have @ $20K each in self employment income for 2014 (schedule C on tax return). I receive a 1099 year end for as an independent contractor that is not affiliated with my primary employer. Hers is self reported from a cash business with no 1099.We each have established SEPs.She can obviously contribute to her SEP for 2014 since she has no other retirement plan.

My questions are:

1. The limit for my wife is 20% of the profit. We don't need the expendable cash at this time. Would we be better off establishing a 401K for her since she could then contribute greater than 20% (up to $23.5K) for 2014.

2. For me, am I allowed to contribute to my SEP with respect the $ earned in my self-employment business in 2014? In doing so, I would then exceed the $57.5K total deferral achieved via my W2 income?

Also, if I can make a self employment deferral, would I be better off establishing a 401K to up the limit towards $23.5K==========I guess you need some professional help from a retirement export.

In essence, I would then have 2 sources of wage deferralprofit sharing/401K/catch up IRA) though my W2 income and(SEP or 401K) though my schedule C income. Would that be legal with the current tax code?=====>>>>>>>> a SEP-IRA are way to save for retirement while saving on current taxes;even If you have income from both W-2 and 1099, you can start and contribute towards SEP-IRA ;as you have both wages and self-employment income, you can contribute to both your employer's 401(k) plan or /and your own SEP-IRA. Since your 401(k) plan is funded out of your paycheck, you must have W2 income in order to qualify. since you also have income from self-employment, such as consulting work or freelance jobs, you can open a SEP-IRA as well and shelter even more income.

SEP Plan FAQs - Contributions



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