Roth IRA
Question: Can a person make a contribution to a SEP-IRA and a Roth IRA too?
Answer:
An individual can make traditional IRA contributions to a SEP-IRA and contributions to a Roth IRA. However, like other traditional IRA contributions, traditional IRA contributions that are made to a SEP IRA reduce the amount that the individual can contribute to a Roth IRA.
An employer that has established a SEP can also make SEP contributions to a SEP IRA on behalf of an individual that is an employee of the employer and those contributions do not reduce the amount that the individual can contribute to a traditional IRA or Roth IRA (a self-employed individual can make such SEP contributions without reducing the amount that the individual can contribute to a traditional IRA or Roth IRA).
It is important to remember that:
- Neither a SEP IRA or a SIMPLE IRA can be designated as a Roth IRA
- Your SEP IRA contribution and Roth IRA contribution cannot be made to the same IRA
- Employer contributions under a SEP IRA do not affect the combined limit on contributions to traditional and Roth IRAs.
Review Chapter 2 of Publication 590, Individual Retirement Arrangements (IRAs), for the requirements to contribute to a SEP and a Roth IRA.
Additional Information:
- Publication 590, Individual Retirement Arrangements (IRAs)
- Tax Topic 451, Individual Retirement Arrangements (IRAs)
Category: Individual Retirement Arrangements (IRAs)
Subcategory: Roth IRA
