* For this purpose, a SEP IRA
or a SIMPLE IRA is treated as ongoing if it is maintained under an employer arrangement under which an employer contribution is made for the plan year ending with or within the IRA owner's taxable year in which the charitable contributions would be made.
(A SEP IRA
is described in Section 408(k), and a SIMPE IRA is described in Section 408(p).)
The rules for post-70 1/2 IRA contributions depend upon whether the account is a traditional IRA, Roth IRA or SEP IRA
. Direct contributions to a traditional IRA are not permitted after the client reaches age 70 1/2, although the client may roll funds from another type of retirement account into his or her traditional IRA.
To qualify for the bonus, the deposit can be in the form of rollovers, trustee-to-trustee transfers and individual contributions (up to annual contribution limits), and may be met with multiple deposits across traditional, Roth, SEP IRA
plans and IRA accounts.
Your main options are the SEP IRA
, the SIMPLE IRA and the solo 401(k) plan, which allow you to deduct your contributions, let your earnings grow tax-deferred and get taxed on withdrawals in retirement.
Some business owner clients can take this a step further, by establishing and contributing to a SEP IRA
, which in some cases can be done as late as October 15, 2014 for 2013.
Last day to establish a qualified retirement plan for 2012 SEP IRA
plans may be established until the tax-filing deadline (generally April 15) plus extension
A SEP IRA
(or simplified employee pension individual retirement account), allows you to contribute up to 25% of your annual income, with a cap of $49,000.
* Under current tax rules, a self-employed person earning less than $46,000 from his or her business could make a greater contribution to a SIMPLE IRA than to a SEP IRA
. This threshold in many cases makes a SIMPLE IRA attractive to early-stage start-ups and part-time businesses.
Make contributions to an SEP IRA
: If your client has retired from a company but continues to work as a consultant, he or she might have unneeded income in early retirement years that can be used to fund an SEP--Simplified Employee Pension--IRA.
George, says SEP IRA
's and SIMPLE IRA's are two of the most popular and feasible retirement plans for small business owners and their employees.
The SEP IRA
and solo 401 (k) plans are two of my favorites.