Thread: IRAs?
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Old 04-13-2009, 02:30 PM
cjlipps cjlipps is offline
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Join Date: Aug 2006
Location: NW OKlahoma
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Quote:
Originally Posted by Skid Row Joe View Post
According to my understanding of SEP IRAs, I'm not understanding your writings of SEP IRAs.

Here is my understanding of SEP IRAs:

1) The SEP has no dollar contribution limit. It is based on percentage only.
2) It is not always a strict profit-sharing plan. I have a SEP IRA, and I am not under any profit-sharing plan for my business.
3) The limit is definitely not the high $40Ks per individual. There is no cap that I'm aware of.
4) It may have changed, but I thought 15% of net self-employed income (with no income cap) was the annual maximum percentage saving limit.
5) A SEP has absolutely nothing to do with a W-2.
6) There is no more complex calculation just because you are a sole proprietor, or partnership. It only depends on how much you earn.
7) Earning as much as $200K would not have anything to do with the percentage you can sock away for yourself. -Since 15% of $200K is $30K, which is a whole lot more than the $6,000.00 present cap for a self-directed, or Roth IRA. There are income caps limiting ones's eligibility to participate in Roth IRAs.

The facts is, if you are making the big bucks, a SEP is the way to go, for that particular year. If not, a Roth is usually the better small IRA tool for that year. Anybody can look up the IRS' tax code on-line and check their own situation.
Here we go again.

I'll concede #2. I misspoke regarding the profit-sharing aspect. It is sometimes tied to profit-sharing but not always.



http://www.irs.gov/retirement/article/0,,id=111419,00.html

Interested to know where you get your "understanding" of a SEP. Here's where to look.
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Last edited by cjlipps; 04-13-2009 at 02:37 PM.
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