IRA deduction
Can a taxpayer who is not a participant in a retirement plan in 2018, take a tax deduction for an IRA contribution made by April 15, 2019, if he or she establishes a SEP Plan for 2018, in 2019, and funds the SEP by the due date of the tax return in 2019? Is the taxpayer considered to have been a participant in a retirement plan for 2018, because of the set up of the SEP, potentially disqualifying the IRA deduction for 2018 ???
Permalink Submitted by Alan - IRA critic on Tue, 2019-07-09 18:28
No, the taxpayer is an “active participant” with respect to the SEP for the year IN WHICH (not for which) the SEP contribution is made. So a SEP Contribution for 2018 made in 2019 does not make the taxpayer an active participant in 2018. However, remember that you also need to consider a spouse’s participation status.