IRA question

[golfer]

I have been self employed and has SEP IRA , i have contributed 37000 in SEP for 2015 , i also have another w-2 from another company for consultation  services for $35000 where i do not participate in retirement plan, can i open another IRA to reduce tax liability . AGI including the above w2 is $383000.

[litovskyassetmanagement]

Do you have any other employer plans available?  You can have a Traditional and/or Roth IRA in addition to your SEP and your employer plans.  However, with a SEP it won't be advantageous to do backdoor Roth, and your traditional IRA contributions are non-deductible.  You might want to look into having a Solo 401k plan instead of the SEP - this will allow you to make salary deferrals and also you can roll your SEP into a solo 401k plan and have the ability to do backdoor Roth contributions.

As far as your original question, no, you can not contribute W2 income into a SEP/solo 401k.  Maybe you can ask them to give you a 1099 instead?

[jfoxcpacfp]

golfer wrote:

I have been self employed and has SEP IRA , i have contributed 37000 in SEP for 2015 , i also have another w-2 from another company for consultation  services for $35000 where i do not participate in retirement plan, can i open another IRA to reduce tax liability . AGI including the above w2 is $383000.

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You should be able to contribute more to your SEP for 2015 if your SE earned income is $306k (383 - 37). You have until the due date of your tax return including extensions to get the $$ into your SEP. As Kon mentioned, you will have to convert your SEP and any other pre-tax IRAs to a SOLO-k before contributing to a back-door Roth, but I realize you are trying to reduce taxes, not pay more  .

If you qualify to contribute to an HSA, that will also reduce your tax bill. Beyond that, you might consider an independent second review of your tax return to see if there are any deductions you might be overlooking

[litovskyassetmanagement]

golfer wrote:

I have been self employed and has SEP IRA , i have contributed 37000 in SEP for 2015 , i also have another w-2 from another company for consultation  services for $35000 where i do not participate in retirement plan, can i open another IRA to reduce tax liability . AGI including the above w2 is $383000.

Click to expand...

Sorry, I blanked out for a bit.  Yes, you can do a solo DB plan that would allow you to contribute significant amount of money on vs the SEP contribution.  So if 20% for you is $40k or so, then for a 1099 income of $200k you might be able to contribute as much as $100k into a solo DB plan.

You can do a combo plan as well (401k with solo DB), and depending on how you pay yourself (W2 instead of 1099 would be preferable), you might be able to contribute significantly more than $37k.  The actual numbers will depend on age, and whether you are already maxing out a 401k plan elsewhere.  If not, then a combo plan would work best.

Here's some more background on this topic:

http://quantiamd.com/player/ygvmhdmbm?cid=1467