Can a sole proprietor have a traditional or roth IRA?

**MonkeyMama** · 01-31-2008, 06:03 AM

yes - either. As long as you have income to report. (You can contribute the lesser of $5k or earned income - for 2008).

**sweeps** · 01-31-2008, 06:37 AM

Also consider a SEP IRA.

**Scanner** · 01-31-2008, 12:51 PM

Yes, I am a sole proprietor and my wife and I have Individual Roth IRA's.

I can also get a SEP-IRA, Keough, or other sheltered account in addition to the Roth but I have not.

I plan to get a SEP-IRA when I need somewhere else to stuff money besides 529's, downpaying debt, getting cars, etc.

(That is. . .it's all I can usually do to max out our Roths every year)

Also. . .I think Roths are taxed on entrance whereas SEP's are taxed on exit.

Both grow tax-free though.

**maat55** · 01-31-2008, 02:19 PM

Scanner

Are you saying that a SEP is a good place to put car fund savings? Is there a penalty for early withdrawl, like traditional IRA's?

**Scanner** · 01-31-2008, 03:19 PM

Oh, no. . .I"m sorry. . .what I wrote was confusing.

I am just saying I never have gotten around to opening a SEP-IRA because it seems by the time I contribute to our Roths ($8000/year, now $10,000), buy a car on a certain year, take a vacation, pay down some debt or whatever. . .that I don't have money left over and beyond my individual Roth.

This is why I have never opened a SEP-IRA.

I suppose this year or next I might as I might actually need the deduction on my top line on my taxes.

**maat55** · 01-31-2008, 04:59 PM

I suppose that if I had extra money after funding roths and car funds I might just put the extra toward paying off the house.

Is the SEP a replacement for a traditional IRA or can you do both with the roth?

**Scanner** · 02-01-2008, 06:33 AM

You know, I'm not sure but I'd imagine you can do

1. A Roth IRA
2. A Traditional IRA
and
3. A SEP-IRA

I could be wrong.

The SEP may indeed preclude opening a Traditional.

I know you have a Individual Traditional and an Individual Roth.

**sweeps** · 02-01-2008, 06:41 AM

Does SEP Plan participation affect IRA contributions?
Employees who participate in a SEP plan are considered "active participants" in an employer retirement plan. As such, the deductibility of their IRA contribution may or may not be affected, depending on their income. SEP plan participation does not, however, reduce or eliminate an employee's ability to fund an IRA, and all IRA earnings are tax-deferred, regardless of SEP plan participation. But more importantly, a SEP plan offers the advantage of a contribution which is potentially much larger than an IRA contribution.

Source

Can a sole proprietor have a traditional or roth IRA?