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Hello and thank you for using Just Answer,Although you cannot just assume your IRA is a SEP, you do have till April 15 to set up the SEP for contributions to count for 2012. Here is a question that the IRS answered on their web page:
Can my employer deposit the SEP contribution from my work plan into my existing traditional IRA or must I set up a separate SEP-IRA?
Your employer may be able to deposit SEP contributions into your traditional IRA depending on the:
There are three basic steps in setting up a SEP, all of which must be satisfied.
In short, yes you can do what you want to do, just make sure that the plan document (even though only you will have a copy) states this is allowed.
Would my setting up this SEP now have any negative consequences for future years?
That is a very open ended question as future is something that cannot be seen. An SEP follows the same rules as an IRA. The ability to contribute is not lost unless your net earnings are reduced. For purposes of the SEP plan rules, a self-employed individual’s compensation means net earnings from self-employment determined under Internal Revenue Code section 1402(a). You cannot use your wages from your regular employment to determine your contributions.
If I make this contribution now for myself for 2012, does that mean that I am locked in to using the SEP format for future years or could I switch too a SIMPLE or a 401k as the needs of the business change?
You would be allowed to switch. The SEP could be rolled into a 401K if your business changes or the SEP terminates.
Awesome. Thanks for your help. I gotta go and take my kids to the zoo!
Your positive rating is always thanks enough.If you could also participate in the very short survey that Just Answer will send you by e-mail I would appreciate that very much.I really enjoyed working with you – please feel free to request me again when you come back to ask another question.