Question

Can i change the excess amount of a SEP ira contribution to be a Traditional IRA contribution for the year and avoid having to withdraw the excess

Forum|Forum|7 years ago
June 5, 2019
1 reply
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This was a suggestion by a rep at the financial company. I just want to see if this is correct?

ItsDeductible Online

Employee

The excess should be removed to avoid penalties. Unless the plan sponsor is paying the compliance penalty then the funds can remain in the SEP account, which generally is not the case.

What may have been intended by the financial rep's suggestion is that instead of returning the excess contribution back to you, the excess funds can be removed from the SEP and be deposited into a Traditional IRA. This may also count as a deductible contribution for you.

Click this IRS link for more information: https://www.irs.gov/retirement-plans/sep-fix-it-guide-contributions-to-the-sep-ira-exceeded-the-maxi...

M

mikepwilsonAuthor

The rep framed it as though it could remain in the SEP IRA and he would recode it as a traditional IRA contribution. I would then track the contribution in the future on the IRS non deductible IRA form. Is this not allowed then?