Solved

SEP AND Individual 401k

Forum|Forum|3 years ago
March 13, 2023
1 reply
0 views

For years, Turbotax home and business has been guiding me toward being able to contribute to BOTH a SEP and an individual 401k as long as I don't exceed specified limits. Now, my financial institution is saying that I have to pick one. I've already filed my return saying that I would do both. What gives? Who's right? I'm in the middle of slogging my way through the IRS pub 560, but it's horribly written, vague and tedious, and I'm not seeing much clarity in it. Any help?

TurboTax Home & Biz Windows

Best answer by DavidD66

You can have both a SEP IRA and a Solo 401k plan and contribute to both plans. This is confirmed in IRS Publication 560, Chapter 2, page 6 “More than one plan”. However, the combined contribution for both plans (the SEP IRA and Solo 401k) may not exceed the annual contribution limit for the year: For 2022 - $61,000, or 25% of compensation from the business, whichever is less.

D

DavidD66Answer

You can have both a SEP IRA and a Solo 401k plan and contribute to both plans. This is confirmed in IRS Publication 560, Chapter 2, page 6 “More than one plan”. However, the combined contribution for both plans (the SEP IRA and Solo 401k) may not exceed the annual contribution limit for the year: For 2022 - $61,000, or 25% of compensation from the business, whichever is less.

**Say "Thanks" by clicking the thumb icon in a post**Mark the post that answers your question by clicking on "Mark as Best Answer"