Can a SEP participant also contribute to a deductible IRA or a Roth IRA?
If the SEP participant’s modified adjusted gross income (MAGI) for 2008 is under $53,000 (single filer) or under $85,000 (married, joint filer), then a full deduction for a traditional IRA contribution is also permitted. The deduction is phased out over the next $10,000 in income for single filers, $20,000 for married filing jointly. If, in a calendar year, the employer does not make contributions to the employees’ SEP IRAs, then every employee is eligible to make and deduct contributions to a traditional IRA, regardless of income. As for Roth contributions, if the individual’s MAGI is under $101,000 (single) or $159,000 (married, joint filer), then their Roth IRAs may be fully funded. Eligible Roth funding is phased out for incomes up to $116,000 (single) or $169,000 (married).
If the SEP participant’s modified adjusted gross income (MAGI) for 2010 is under $56,000 (single filer) or under $89,000 (married, joint filer), then a full deduction for a traditional IRA contribution is also permitted. The deduction is phased out over the next $10,000 in income for single filers, $20,000 for married filing jointly. If, in a calendar year, the employer does not make contributions to the employees’ SEP IRAs, then every employee is eligible to make and deduct contributions to a traditional IRA, regardless of income. As for Roth contributions, if the SEP participant’s MAGI is not more than $105,000 (single) or $167,000 (married filing joinly), then their Roth IRAs may be fully funded in 2010. Eligible Roth funding phases out for incomes up to $120,000 for singles and $177,000 for couples in 2010.
