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Opening a new SEP IRA need suggestions
Old 03-30-2015, 12:00 AM   #1
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Opening a new SEP IRA need suggestions

Got a call from my accountant today (Sunday, nice guy)saying my taxes are ready for pickup and don't be surprised by the 17k balance due because of the increase in business last year. I should also plan on $6k estimated quarterlies for the rest of this year. When asking him how to help mitigate the amount he suggested opening a SEP IRA before April 15th. An $11k investment would shave almost $3k off of the tax bill this year.
Up until now my Roth and all other investments are self directed. Does anyone use a firm either sticks and bricks or online that allows for this self directed type of SEP IRA?
This increase is a result of a large increase in profits last year without a corresponding increase in expenses. I was driving with blinders on all year and just spaced out as to the tax consequences come the end of the year.

Any suggestions from those that have been the SEP IRA route would be appreciated. Thanks

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Old 03-30-2015, 12:59 AM   #2
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Most brokerages will allow you to open a SEP IRA. It's just another type of IRA, and no harder to open than the other types.

You accountant, after completing your Schedule C, will tell you your max contribution to your SEP IRA for the year. Do NOT rely on online calculators or rules of thumb like 25% or 20% of your net income.

And if I claim to be a wise man, it surely means that I don't know.
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Old 03-30-2015, 08:27 AM   #3
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By all means take out the SEP. I've had one for 27 years and have invested the maximum available each year. The max is now at 25% of earned income (really it's about 22.1% ---ask they IRS how they can turn 25% into 22.1%) Anyway, I agree with your tax man. Take out a SEP and try to fill it to the max every year. It's really a traditional IRA with a higher cap, and you can still take our your Roth.

Do you have employees ? If so, after 36 months you have to contribute the same amount for them. Your accountant can fill you in on the details.
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Old 03-30-2015, 09:01 AM   #4
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For a sole proprietor you can put in 20 pct of your profit.

Check on whether or not you can open a SEP this year, for 2014 contributions.

You need to get this done asap. Some institutions may slow you down with paper.

Edit: You can set up a SEP plan for a year as late as the due date (including extensions) of your businessís income tax return for that year.
SEP Plan FAQs - Establishing a SEP
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Old 03-30-2015, 09:36 AM   #5
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I use Schwab for my SEP/IRA. No different than any other IRA's as far as the mechanics of deposits, investing, etc.
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Old 03-30-2015, 10:33 AM   #6
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For the future--if you have no employees (or only your wife as an employee), and if you'd like/need to put away more money than is allowed by a SEP, consider setting up a solo 401K. It has higher limits (and a higher percentage of your first dollars, too. You could put away every dollar of the first $18K earned ($24K if age 50 or older)).

They are simple to set up.

It's too late to set one up for 2014, but you could do it now for 2015.

A comparison chart of small business retirement options.
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Old 03-31-2015, 04:22 PM   #7
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I moved my SEP IRA to vanguard. No extra fees and one great place. Max out the SEP contribution!

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Old 03-31-2015, 06:56 PM   #8
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I use Vanguard for my SEP and they have been great.

Painful about the $17k tax bill. We had one like that about 3 years ago. Now we have our accountant reassess twice during the year to make sure our quarterly payments are on track.

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