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
[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips. Please click on the subscribe link and join us.]- 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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