SEP IRA Overcontribution
A client needed to make a corrective distribution from her SEP IRA for 2019. Funds were rolled into a traditional IRA. Does that transfer reduce her $7k (over age 50) 2020 contributions?
A client needed to make a corrective distribution from her SEP IRA for 2019. Funds were rolled into a traditional IRA. Does that transfer reduce her $7k (over age 50) 2020 contributions?
Permalink Submitted by Alan - IRA critic on Fri, 2020-04-24 23:32
In what order were these transactions done? Did client make a SEP contribution for 2019 in excess of her deductible limit? How much over that limit? Is client still working in 2020? How much is in the SEP account now?
Permalink Submitted by William Tuttle on Sat, 2020-04-25 11:21
Permalink Submitted by David Mertz on Sat, 2020-04-25 11:51
Was the corrective distribution from the SEP plan deposited into the regular traditional IRA? If so, that transaction would be a regular contribution to the traditional IRA, not a rollover from the SEP-IRA to the regular traditional IRA, and would be a regular contribution for the year that the contribution was designated at the time of the deposit into the regular traditional IRA, subject to the regular IRA contribution limit for that year.