SEP-IRA and Roth contributions allowed at the same time?

[Guest bsmith12]

I have a SEP-IRA my company contributes to each year on my behalf, approx $10K - $15K. None of the money that goes into the SEP is my own, it's all company money. I was told by our company's financial advisor that I could open a Roth IRA and contribute to that on my own, but cannot contribute to a Traditional IRA -- is that correct?

I do have a Traditional IRA set up at Vanguard which I have periodically rolled over funds from the SEP-IRA into. The company SEP-IRA is at the evil Putnam Funds, so I try to move the money out of there as fast as possible. I assume these rollovers do not count as "contributions" to the Traditional IRA -- at least that's what Vanguard reps led me to beleive.

I'm single, make $80K year, 40 years old.

Thanks.

[Appleby]

When moving money from the SEP to your traditional IRA, you may want to move it as a transfer, not as a rollover. You may already be doing so, but is using rollover to mean transfer. This is because an IRA can be involved in only one rollover during a 12-month period.

You can contribute to your Traditional IRA as long as you have eligible compensation. The fact that you receive a SEP contribution means that you do have eligible compensation. However, you may not be able to deduct the contribution, since you participate in a SEP IRA. For taxpayers who’s tax filing status is single, traditional IRA contributions are not deductible if the modified adjusted gross income is more than $60,000 (for 2005). Therefore, it’s not that you cannot contribute to a traditional IRA, but that it may make better financial sense to contribute to a Roth. See

Rollover contributions do not count as part of your regular IRA contribution.

Why not ask your employer is he/she would be willing to make your SEP contributions to your Traditional IRA ? First , ask your IRA custodian if they allow SEP contributions to regular/non-SEP traditional IRAs, and if not, ask them if they would accept a copy of your employer’s SEP Adoption agreement to change your Traditional IRA to a SEP IRA. Also, if your employer agrees, he/she should first check to see if the SEP agreement has any restrictions that would prevent contributions from being made to an account at another financial institution.

Good luck

[Guest bsmith12]

You are correct, I meant transfer, not rollover...

The little glitch with the company SEP is that the company's financial advisor is a good friend of the owner and has been good to them through the years, so they keep him happy selling loaded funds for the company plan... I just grin and bear it, let him take his cut up front on the "A" shares, consider it all "free" money to me anyway, and get it out of Putnam and over to Vanguard as fast as possible (avoiding Putnam's slap-in-the-face "early trading" fees if possible)

I called Vanguard a few years back to inquire about our company setting up a plan there and they didn't seem interested in very small businesses (IIRC there might have been a $50K minimum to start a plan there) Vanguard's attitude may have changed since then.

[Guest Fishchick]

I think you ought to ask your employer for a copy of the SEP plan. (They should have given you one anyway). Chances are, there is nothing in the plan that restricts where the deposits must be made. Vanguard's website says there is no minimum for a SEP-IRA.