I got a client who made a SEP contribution to her account for $900.00 during calandar year 2008. She can not take the SEP deduction for 2008. She has no employees, it's just her, the owner.

Can she get the custodian to transfer the amount to a non-deductible IRA as an option? Or can she just put the whole amount out, principal
and earnings, then go back and amend the 2008 return, just for the earnings, if any.

So I guess I like to know my options. Thanks for your help


David Banford, CPA

Dave,
Need more information. Was there a Sch C profit? Was there any earned income from other sources? She may be able to re-characterize the contribution as a Traditional Contribution. Deductibility will depend on earned income. If none, then she can remove as an excess. The fact that she has no employees does not preclude a SEP contribution if earned income exists.

There is no earned income, and no Schedule C profit.

What I want to know is can she convert this to a non-deductible IRA or as a Roth Contribution? The return for 2008
was already filed.

Thanks

No earned income then no contribution. It must be removed as an excess. Roth contributions require earned income.