Deceased Person and SEP IRA Contribution - Spidell

Deceased Person and SEP IRA Contribution

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Message Board Deceased Person and SEP IRA Contribution

This topic contains 1 reply, has 2 voices, and was last updated by Larry Pon 4 months ago.

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  • #161085

    A self-employed taxpayer’s 2018 return is currently on extension.  He passed away unexpectedly a couple of weeks ago.  Can a SEP IRA contribution still be made on his behalf for 2018 and be claimed as a deduction on his 2018 return?

  • #161111
    Larry Pon

    You cannot make an IRA or retirement plan contribution for a deceased person because the IRS says that person is no longer saving for his retirement.  The IRA owner will not benefit from the IRA contribution.

    You would think you can because that person would have still been eligible due to income received before death, etc.

    However, it is OK if the contribution was made before he died because at that time, he was still alive.

    What if you made the contribution anyway?   It would be considered an Excess Contribution subject to the 6% penalty unless it is removed from the IRA account.   To avoid any penalty, that contribution plus earnings or loss have to be removed by October 15th of the year after the contribution was made.

    However, a surviving spouse could make a spousal IRA contribution for the surviving spouse’s own IRA.

    The surviving spouse can do a spousal rollover of the SEP IRA.