Put SEP-IRA contributions into T-IRA?

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ResearchMed
Posts: 6625
Joined: Fri Dec 26, 2008 11:25 pm

Put SEP-IRA contributions into T-IRA?

Post by ResearchMed » Thu Nov 30, 2017 10:08 am

I know that SEP-IRA and TIRA accounts can be combined (or they used to be).

DH is self employed as a consultant again this year, with 1099 income in addition to full time regular employment with a large employer and 403b plan.

Apparently his SEP-IRA from a few years ago was closed (probably from combining accounts, but not totally sure).

Can he put his SEP-IRA contributions from his consulting income into an existing TIRA, or must he open a specifically "SEP" IRA to receive this money?
It would be nice/easier if he didn't need to open a new account that he wouldn't otherwise need.

Thanks.

RM
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PFInterest
Posts: 1460
Joined: Sun Jan 08, 2017 12:25 pm

Re: Put SEP-IRA contributions into T-IRA?

Post by PFInterest » Thu Nov 30, 2017 3:48 pm

you should be able to combine them.

DSInvestor
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Joined: Sat Oct 04, 2008 11:42 am

Re: Put SEP-IRA contributions into T-IRA?

Post by DSInvestor » Thu Nov 30, 2017 3:55 pm

If you need to use backdoor into Roth IRA, Solo 401k would be a better choice than SEP-IRA to defer some of that 1099 income. This avoids issues with IRA basis proration on partial conversions. Form 8606 sees SEP-IRA assets but does not see 401k assets.

SEP-IRA would allow for up to 54K of contributions and once the contribution has been made to SEP-IRA, you can transfer into TIRA if you wish as a rollover which would not consume TIRA contribution space.

My old Vanguard SEP-IRA account can accept SEP-IRA contributions from self employed income as well as employee contributions. Employee contributions into the SEP-IRA are treated as Traditional IRA contributions. AFAIK, There is no mechanism in Traditional IRA accounts to accept SEP-IRA contributions.

If he decides to use solo 401k, be aware that the solo 401k plan must be established no later than 12/31/2017 in order to allow contributions for the 2017 tax year.
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DrGoogle2017
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Joined: Mon Aug 14, 2017 12:31 pm

Re: Put SEP-IRA contributions into T-IRA?

Post by DrGoogle2017 » Thu Nov 30, 2017 10:59 pm

You may need to open new account, either Solo 401k or SEP IRA. I’m not sure it’s ok to contribute to a close one.

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