Traditional IRA Contribution after setting up a SEPP
L1: Traditional IRA Contribution after setting up a SEPPDOB 4-5-59,Date of first distribution was 1-21-2015 (annual distribution), took second distribution on 1-22-2016.
Iset up2 Traditional IRA accts at Vanguard in 2014, I’ll call them A & B. I started SEPP on account A on 1-21-2015. I know I can not modify account A till after 1-21-2020.
I need to get my adjusted gross income down for 2015, can I, or my wife (on my behave)add to Account B for tax year 2015 without creating an issue?
If so, am I correct in saying that adding to account B would not be considered a “repayment”?
The IRS will see that I took an early IRA distribution (using equal periodic payments exception), but alsothat I made a 2015contribution.
Thanks for you thoughts. This site is great!2016-01-22 22:50, By: fred, IP: [184.108.40.206]
L2: Traditional IRA Contribution after setting up a SEPPYes. having a SEPP using IRA account A does not preclude you from making a Traditional IRA contribution to IRA account B. Also, if your wife does not work, then you can make a “non-working spouse” contribution to an IRA in her name. She can also make her own contribution if she works, and can make a “non-working spouse” contribution to your IRA account B if you did not work at all in 2015.
These situations happen often when someone starts a SEPP after terminating employment, voluntarily or involuntarily, or because of disability, and later starts to work again, usually more than a year later, but sometimes sooner.
Remember the extra IRA contribution since you are over 50.2016-01-23 04:32, By: dlzallestaxes, IP: [220.127.116.11]
L3: Traditional IRA Contribution after setting up a SEPPThanks for your timely reply!
I am using a tax software program (not sure if I’m permitted to state their name) and it has made my first year under SEPP rules and reporting very smooth.(proper code changes, files 5329 etc)
I am using their interview process so I don’t miss anything. The program does ask “Is this a Repayment of a Retirement Distribution? Was the contribution a REPAYMENT of money previously taken out of a retirement plan? In other words, are you returning money back to your retirement plan after you took a distribution?”
I’m answering “no” asa contribution to Traditional IRA account B will be made, my 72t distribution was from account A.
Am I correct in my answer?
Fred2016-01-23 15:55, By: fred, IP: [18.104.22.168]
L4: Traditional IRA Contribution after setting up a SEPPYES. That question is related to repayment if excess contributions are being made, or if someone changes their mind after taking a distribution.2016-01-23 17:00, By: dlzallestaxes, IP: [22.214.171.124]
L4: Traditional IRA Contribution after setting up a SEPPYou can tell me what the name of the software is, I won’t repeat a word…
MnM2016-01-27 19:58, By: MnM cruncher, IP: [126.96.36.199]