Contact UsMy client contributed $1900 to a new SEP account and took the deduction on his 2011 tax return. Upon receipt of his 5498 he learned the money had been deposited in a traditional IRA and not a SEP. How do we correct this? Can he open a SEP account with a different brogerage firm and "roll over" his original contribution without amending his original return? Must he amend his return and pay tax on the non-deductible portion of his original contribution?
If treated as an IRA contribution, only $600 is deductible since he is covered by and participates in his employers 401k plan.
TaxConnections Members... Answer This Question
Want To be One of Our Tax Experts? Register Here
Tax Professional Answers
William Keats
If this was the broker's error I would not amend the returns. The contribution should be transferred from the IRA to the SEP. However, if client's fault: Amend return to show $600. deductible, and the balance of $1300. is taxable.
Leave a Comment
533 weeks ago