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    tanner428's Avatar
    tanner428 Posts: 1, Reputation: 1
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    #1

    Jan 23, 2012, 05:33 AM
    Can a taxpayer put 25% of his profit from an LLC into a sep-ira?
    The LLC is a real estate rental business. I would want to convert the sep-ira to a Roth with the goal of tax-shielding future earning on these funds.
    ebaines's Avatar
    ebaines Posts: 12,131, Reputation: 1307
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    #2

    Jan 23, 2012, 06:45 AM
    Yes, you can contribute to a SEP IRA, but if you are self-employed the max amount is 20%, not 25%. This is because your contribution limit is affected by the deduction for self employment tax, which reduces the amount of profit that counts against the 25% limit. And yes - later you can convert the SEP IRA to a Roth IRA, but you will have to pay income tax on the conversion.
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