TIAA-CREF has finally come through! You may have been following the saga. If not, here’s the short version: In order to reduce my tax liability from self-employment income, I wanted to open a SEP IRA. The SEP IRA lets you contribute tax-free beyond the Traditional/Roth IRA limit, but only as an employer. I employ myself and generated several thousand dollars last year, so I qualify.
There are more details about SEP IRAs here, but basically I was allowed to invest up to 25% of my income or $42,000, which ever amount is less. Needless to say, I didn’t invest $42,000. In fact, I only invested $858, but it was enough to turn my remaining 2005 tax liability into a tax refund.
I applied for the account in March and my application was received on time by TIAA-CREF in order for my funds to be deposited via EFT on April 7. I tried to leave enough time before the tax deadline (April 17) just in case I ran into problems.
Ran into problems I did. I think it’s just attributable to the fund company’s backlog during tax season, but they didn’t get around to funding my account. I called several times as I mentioned in previous posts, and I’m happy to report that today, the account was finally funded. I was assured the contribution would be “coded” to qualify for the 2005 tax year, even though it is now past the tax deadline and I didn’t file for an extension.
I chose the TIAA-CREF International Equity Index Fund (TRIEX) to increase my exposure to international stocks as I felt that sector could use a little boost in my allocation.
Throughout 2006, I will continue to contribute to the SEP IRA on a “once-in-a-while” basis. I want to make sure I don’t go over the limit (25% of self-employment income). I was spurred on to look into the SEP IRA account to reduce my tax liability after reading two posts on Blueprint for Financial Prosperity. Thanks, Jim!
Email this article
Print this article
Share this article: Twitter | Tip'd | Facebook | Delicious | Reddit | Digg
About the Author
