Double Contributions

Today TaxMama hears from Bill, in New Hampshire, who tells us, “I am employed with a work sponsored 401(k) plan to which I contribute the maximum PLUS the catch-up limit.
I am also self-employed with a SEP to which the maximum is contributed.
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Can the SEP also accept a catch-up contribution? I am over age 50. “

Dear Bill,

Well done. Keep this up and you’ll have a rich and satisfying retirement.

What may you contribute to your Self Employed Pension (SEP)?

There is no specific catch-up additional contribution for SEPs, just the total annual limits.
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https://www.kelanroycpa.com/krcpa/2002_Contribution_Limits.htm
(note: Disregard the 2002 in the URL. This link does have the limits to at least 2007 for ALL plans.
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)

As long as your total contributions to both the 401(k) at work, and your SEP for your own business don’t exceed the maximum allowable contributions for a SEP, which are $44,000 (2006) $42,000 (2005), you should be fine. https://www.finance.cch.com/text/c40s10d280.asp

Go forth and save!

And remember, you’ll find answers to questions about retirement contributions and all kinds of tax issues, free. Where? Where else? At TaxMama.com

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  • Ask TaxMama :: Where taxes are fun and answers are free
  • Kelan Roy CPA :: the total annual limits.
  • CCH :: Explanation of SEP Contribution Limits

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