large IRA deposit

Forum|Forum|2 years ago
March 9, 2024
2 replies
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the system reduces my contribution to $7500 -- i thought the limit was much higher

Best answer by DoninGA

i found it -- but it seems the anount she can contribute is a % of her income -- true??

@OldCarGuy wrote:

i found it -- but it seems the anount she can contribute is a % of her income -- true??

True. Go to this IRS website - https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people

Simplified Employee Pension (SEP)

Contribute as much as 25% of your net earnings from self-employment (not including contributions for yourself), up to $66,000 for 2023 ($61,000 for 2022, $58,000 for 2021, $57,000 for 2020 and $56,000 for 2019).

Bsch4477

Employee

Nope. That’s the limit if over age 50.

dmertz

Employee

Make sure that you are not entering contributions made to an employer plan as personal IRA contributions. Enter amounts shown in box 12 of your W-2 only in box 12 of TurboTax's W-2 form, nowhere else in TurboTax.

OldCarGuyAuthor

this money went into a old SEP IRA -- does that make a differecne ??

dmertz

Employee

Making a personal contribution (not a SEP contribution) to a SEP IRA is permitted by the tax code and is treated on your tax return as any other personal IRA contribution. However, when making a regular personal contribution to a SEP IRA you must tell the SEP-IRA custodian that it's a regular contribution and not a SEP contribution so that it is reported correctly on Form 5498. Some SEP-IRA custodians to not allow regular personal contributions to be made to a SEP IRA so that they don't have to deal with the difference in the way contributions to the account would have to be reported. To avoid any confusion, it's usually best to make the regular personal contributions to a separate ordinary traditional IRA.