Discussion:SEP-IRA Plan for Statutory Employee

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Discussion Forum Index --> Advanced Tax Questions --> SEP-IRA Plan for Statutory Employee
Discussion Forum Index --> Tax Questions --> SEP-IRA Plan for Statutory Employee

Taxwizard (talk\|edits) said:	30 May 2008
Lacerte will not compute a SEP-IRA deduction for my client since he has no self-employment earnings. Lacerte assures me that my client is not eligible for a SEP-IRA deduction -- even though his Schedule C net is over $300,000. Is Lacerte right about this?

WesR (talk\|edits) said:	30 May 2008
Hi does the "statutory employee" participate in the employer plan? Is his W-2 retirement box checked? If so he probably cannot have one of his own. Havent looked it up but thats my guess. bye

Riley2 (talk\|edits) said:	31 May 2008
Lacerte is absolutely wrong about this. For purposes of retirement plan and self-employed health insurance deductions, a statutory employee’s SE income is his schedule C net. See Sec. 401(c)(2)(A)(iii).

RoyDaleOne (talk|edits) said:

31 May 2008

401(c), in part states that:

(i) only with respect to a trade or business in which

         personal services of the taxpayer are a material
         income-producing factor,

The posting states that is no SE earnings, thereby, indicating that personal service was not a material income producing factor on the Schedule C. Maybe, a passive activity relative to the Schedule C by the SP.

Why is there no SE income from the Schedule C?

Taxwizard (talk\|edits) said:	31 May 2008
The statutory employee is a full-time life insurance salesman. The reason he has no earnings on Schedule SE is that all of his earnings on Schedule C are subject to FICA/Medicare withholding.

RoyDaleOne (talk\|edits) said:	31 May 2008
Taxwizard I see no reference to a statutory employee in your original post. Naturally, that fact would effect a comment. See Riley's post and ignore mine.