I have a SEP-IRA account of $475K in VBTLX, funded from 20 years of contributions totaling $265K.
I was the owner of a small business, and the sole employee. On my (self-prepared) W2 forms each year I checked the "retirement plan" box, referring to the SEP-IRA plan, and now I wonder if this caused the contributions to be treated as nondeductible. I do have 25 years of my 1040 records that I can reference, if I know what to look for.
This year I expect to earn $25K in W2 income (from a part time gig that I like, not the business I owned), and $100K in dividends and capital gains distributions from my nonretirement accounts (mostly VTSAX, some VTIAX).
I spend roughly $50K/year, and re-invest the remainder. I'm in my early fifties, and in no rush to retire from the part time job.
What is the best way to handle the SEP-IRA, and any future IRA contributions?
1- Should I be considering a Roth conversion of the SEP account, paying tax on the $210K (or maybe $475K) in gains this year?
2- What can I expect that federal tax obligation to look like?
3- Will doing a conversion of that size tax my gains at a higher rate, as opposed to taking distributions from the SEP-IRA after I retire?
4- Should I make future annual IRA contributions to a traditional IRA?
I appreciate any guidance you can provide! I feel good about my investment choices and results, but I fear I've been sloppy with the IRA situation, and I want to make sure I'm not missing any opportunities.
I was the owner of a small business, and the sole employee. On my (self-prepared) W2 forms each year I checked the "retirement plan" box, referring to the SEP-IRA plan, and now I wonder if this caused the contributions to be treated as nondeductible. I do have 25 years of my 1040 records that I can reference, if I know what to look for.
This year I expect to earn $25K in W2 income (from a part time gig that I like, not the business I owned), and $100K in dividends and capital gains distributions from my nonretirement accounts (mostly VTSAX, some VTIAX).
I spend roughly $50K/year, and re-invest the remainder. I'm in my early fifties, and in no rush to retire from the part time job.
What is the best way to handle the SEP-IRA, and any future IRA contributions?
1- Should I be considering a Roth conversion of the SEP account, paying tax on the $210K (or maybe $475K) in gains this year?
2- What can I expect that federal tax obligation to look like?
3- Will doing a conversion of that size tax my gains at a higher rate, as opposed to taking distributions from the SEP-IRA after I retire?
4- Should I make future annual IRA contributions to a traditional IRA?
I appreciate any guidance you can provide! I feel good about my investment choices and results, but I fear I've been sloppy with the IRA situation, and I want to make sure I'm not missing any opportunities.
Statistics: Posted by benfaremo — Fri Feb 09, 2024 10:05 pm — Replies 0 — Views 68