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QUESTION DETAIL
Related User
Votes
In February 2014, I withdrew $10,000 from my SEP-IRA for personal expenses. I did not roll it over within 60 days. I understand that I will suffer a 10% penalty and be taxed on the $10,000 withdrawal. My question is: If I now make a new $10,000 contribution to my SEP-IRA (my income level permits it) will that at least offset the tax consequences on the $10,000 withdrawal, excluding the 10% penalty?
ANSWER
The BIDaWIZ Team's Answer:
Yes, a $10,000 contribution to your SEP-IRA will reduce your adjusted gross income and offset the tax consequences from the withdrawal of the same amount. This is referenced in Internal Revenue Code Section IRC 408(k).
