CathysTaxes wrote:I've also read that contributions to a SEP IRA does not impact contributions to a Traditional IRA. My tax software is allowing both contributions.
As I understand it, you are setting up a SEP for 2022 and funding the SEP in 2023. For the 2022 tax year, regardless of how much you fund the SEP, you are not considered an active participant in a plan at work for 2022 for purposes of whether you can make a deductible contribution to your IRA pursuant to IRC Reg 1.219.2(d).
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(d) Profit-sharing and stock-bonus plans - (1) In general. This paragraph applies to profit-sharing and stock bonus plans. An individual is an active participant in such plans in a taxable year if a forfeiture is allocated to his account as of a date in such taxable year. An individual is also an active participant in a taxable year in such plans if an employer contribution is added to the participant's account in such taxable year. A contribution is added to a participant's account as of the later of the following two dates: the date the contribution is made or the date as of which it is allocated. Thus, if a contribution is made in an individual's taxable year 2 and allocated as of a date in individual's taxable year 1, the later of the relevant dates is the date the contribution is made. Consequently, the individual is an active participant in year 2 but not in year 1 as a result of that contribution."