"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote:
- quote -

Mea culpa! All of the responses to my reply are correct;
the age 70.5 restriction does not apply to contributions to
a SEP. I should have confined my original response to the
question originally asked!

Joel Berry, CPA
Sugar Land, Texas

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"HW "Skip" Weldon" <skip5700removethis[at]hotmail.com> wrote:
- quote -

Nope. You still have to take distributions, even though you
are still contributing.

Barry Picker, CPA/PFS, CFP

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- quote -

No. The required minimum distribution must be made even
though he is still working.

Mary Ann Thomas, EA in AZ

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HW "Skip" Weldon wrote:
- quote -

A SEP-IRA follows the IRA rules. Mandatory distributions
are required at age 70 1/2 regardless of work status.

--

Alan
http://taxtopics.net

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HW "Skip" Weldon wrote:
- quote -

I wonder too. But since the contributions are made into an
IRA acocunt, I should think minimum distributions would be
required.

Let's assume then, that I'm still working at age 70 1/2, and
my corporation makes it's 25% of salary contribution, I
wonder whether it would be less or more than 1/26.3 of my
balance.

help!

Christmas Cheer$,
Harlan Lunsford, EA n LA

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"Barry Picker" <bpickercpa[at]mindspring.com> wrote:

- quote -

What about minimum distributions from SEP for self-employed
post 70.5 - is that postponed so long as still working?

-HW "Skip" Weldon
Columbia, SC

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- quote -

Not correct. You can still contribute to a SEP-IRA, even if
your ineligible to contribute the annual $3,000/$3,500
contribution.

Barry Picker, CPA/PFS, CFP

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Joel Berry, CPA wrote:
- quote -

That's my first impression too, Joel, assuming he is self
employed.

But now I'm wondering, when (and if) I get to 70 1/2, will
not my corporation still be able to contribute 25% of
salary? Hmmmm....

Cheer$,
Harlan Lunsford, EA n LA

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- quote -

Is this correct? Can you NOT make SEP-IRA contributions
when you reach 70 1/2 even though you are still self
employed?

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Joel Berry, CPA wrote:
- quote -

Simple IRAs and SEP-IRAs are not subject to the age 70 1/2
rule. That rule only applies to traditional IRAs.

Contributions to the plan only affect that year's balance.
You use the 12/31 balance of the prior year to compute the
RMD.

--

Alan
http://taxtopics.net

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- quote -

As long as he is self employed he can continue to make
SEP-IRA contributions beyond age 70 1/2

Robert C. McRae, CPA
Tyler, Texas

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- quote -

Actually, there is no age limit on contributions to SEPs.
Over 70 1/2 is eligible so long as the person has
self-emploment income.

Mary Ann Thomas, EA in AZ

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<karl1973[at]my-deja.com> wrote:

- quote -

Your bigger problem is discussed in your first paragraph.
When your father turned 70 1/2, he lost his ability to
continue making contributions to his SEP-IRA.

Joel Berry, CPA
Sugar Land, Texas

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My 74-year-old father continues to work and make
contributions to his SEP-IRA. On April 9, 2003 he made a
$6,000 contribution to his SEP for tax year 2002.

Let's say his 12/31/02 SEP-IRA balance was $100,000. What
balance is used in calculating his RMD for 2003? Is it $100K
or $106K?

Do I add in the 2002 contribution that wasn't made till this
year and then divide that total ($106,000) by 23.8 to get
the RMD amount? That's the way one used to have to do it.

I'm a bit confused about this issue because in previous
years one always had to add these prior year contributions
to their year end balance when calculating RMDs. Publication
590 used to state: "The amount in the IRA at the end of the
preceding year is increased by any contributions for the
preceding year that were made in the year for which the
minimum distribution is being figured."

That language has been changed in the 2002 version of
Publication 590 which now states on page 32: "Disregard
contributions made after December 31 of last year in
determining your minimum distribution for this year."

I'm confused. Has the IRS changed the rules? Is the IRS
trying to drive me insane by changing the rules after I
already went through all the trouble of learning their old
rules?

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