Question

SEP contribution greater than what I expect using maximize

Forum|Forum|4 years ago
April 17, 2022
1 reply
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Hi, can anybody explain why this is happening:

When I first selected to maximize the SEP contribution for my wife and I (both totally independent contractors) the contribution limit came back as greater than our net income. When I then manually entered the net incomes it still came back with a contribution limit greater than 25% of net income. I'm wondering if this has something to do with the fact that I converted a big chunck of our traditional IRAs to Roth and TT is somehow using that in the calculation?

Thanks for any help on this.

J

joeh2432Author

Never mind, I just answered my own question...sort of. I originally must not have completed all required entries and TT was using a net income figure based on incomplete information. Then I jumped to the SEP calculation and I got numbers that were way to big, so I put in what I knew were the correct net income numbers and recalculated. I still got numbers that were too big. So I set the matter aside and went back to fill in some missing entries. When I returned to SEP, the numbers were still high, so I opened the SEP worksheet to see what was going on. The SEP worksheet had my correct net income numbers (which must have finally corrected themselves when I finished entering missing data), but it was adjusting those upward by the amounts that I was putting in the adjustment boxes, which was also the net income numbers. So I removed the adjustment numbers and recalculated. Numbers are now correct.

Uh....I guess I should be a little more patient and follow the process🙄