Traditional IRA & SEP IRA

[Guest AJ Milano]

Hi: I have a simple question that I hope anyone can answer. I have been always been told that a SEP IRA is an IRA. I have a client with an existing IRA. Can they add to it assets from a SEP IRA, and make both Traditional and SEP contribtuions to it?

Thanks for the help, Anthony

[jevd]

Yes. Sep contributions are made to Traditional IRAs. You may make traditional contributions, SEP contributions or even Rollover contributions to the same Traditional IRA account. SEP contributions are reported on form 5498 for the year "in which" they are made regardless of the year "For which" they are made.

Although you may co-mingle these contributions, a SEP plan with common law employees is considered an Employee Benefit Plan under ERISA and the co-mingling of these contributions may endanger Title I protection under ERISA. See previous threads regarding this issue.