Congressman - "Social Security could be in default in 2 years"

[Decker]

I am self employed and can put away almost 40% tax free.  

That's quite a trick considering ER contributions to a SEP are capped at 25% of your net annual income.

[Soul Crusher]

That's quite a trick considering ER contributions to a SEP are capped at 25% of your net annual income.

Decker - this is why some of us have numerous corporations, etc. 

[Decker]

Decker - this is why some of us have numerous corporations, etc. 

The 25% cap is a personal cap imposed by the law.  In other words, it doesn't matter how many corporations pay you, your contribution to a SEP is still capped for you, 33333...., at 25% of your annual net income.  That 25% is capped at $46,000 for 2008.

Are your contributions in excess of $46,000?

If they are, you have a problem.

Here's some more free advice.

If you're doing what I think you are doing, you are in big trouble.  The DOL will pull your tax breaks retroactively and impose penalties on you...if they find out.   And eventually, they do.

[Soul Crusher]

The 25% cap is a personal cap imposed by the law.  In other words, it doesn't matter how many corporations pay you, your contribution to a SEP is still capped for you, 33333...., at 25% of your annual net income.  That 25% is capped at $46,000 for 2008.

Are your contributions in excess of $46,000?

If they are, you have a problem.

Here's some more free advice.

If you're doing what I think you are doing, you are in big trouble.  The DOL will pull your tax breaks retroactively and impose penalties on you...if they find out.   And eventually, they do.

Last year no, I did not put that much away into the SEP because I saving up for a house and dont want to pay fees and a penalty if I have to take the money out.