How Can CIA Help You?

Ask An Advisor
Retirement Calculator
eBook
Request Consultation
Social Security Optimizer
Ask an Advisor
Retirement Calculator
eBook
Request Consultation
Social Security Optimizer
Blog

General Finance – SEP IRA

Q:  I’m employed full time in a sales position. My employer has decided not to offer a 401K anymore, so I’m trying to decide where and how to continue my long term savings. In addition, I DJ on the weekends as a 1099 sole proprietorship. My income can fluctuate between $80K – 100K a year. I’ll be 29 in December, and I’m trying to decide what to do with my short term savings as well. I have $15K put away as cash for emergencies, but I need to figure out where to put my other money both long and short term. I’m also trying to reduce my tax burden as much as possible. I’m not too interested in purchasing a house, as I feel the costs of home ownership tend to outweigh or wash the interest write off on a tax return. Do I qualify for a SEP IRA? Maybe I should start a Roth? Maybe buy mutual funds and individual stocks? I’m thinking 10% of my income goes in to my long-term savings, then maybe 5-10% could go into short term depending on fluctuating income/commissions. Any advice you could offer would be great.

 

A: Given your situation, opening a SEP IRA could be a good option for you. A few comments…

 

1) If your company terminated their 401k, you should be able to rollover your balance to a SEP IRA. 

 

2) Because you are self employed, you can contribute the following amount annually to a SEP: up to 25% of your earned (DJ) income. Your earned income (see IRS Publication 560) is your net business profit derived from your business, reduced by deductions for your self employment tax and contributions to your SEP. 

 

3) If you had already made contributions to your employer’s 401k this year, your total contribution to your SEP and 401k cannot exceed $52,000. 

 

Here is a link to IRS Publication 560: http://www.irs.gov/pub/irs-pdf/p560.pdf#page15


 

How Can CIA Help You?

Ask an Advisor
Retirement Calculator
eBook
Request Consultation
Social Security Optimizer
jordan 12 cherry jordan 12 cherry jordan 12 cherry jordan 12 flu game jordan 12 flu game jordan 12 flu game jordan 12 french jordan 12 french jordan 12 french jordan 12 gym jordan 12 gym jordan 12 gym jordan 12 ovo jordan 12 ovo jordan 12 ovo jordan 12 unc jordan 12 unc jordan 12 unc jordan 12 wings jordan 12 wings jordan 12 wings
adidas human race black adidas human race blue adidas human race green adidas human race grey adidas human race pink adidas human race red adidas human race white adidas human race yellow