SEP IRA Contribution?

[Greg Swartzberg]

Tax deferral help needed: I am a full-time W-2 employee and max out my pre-tax contributions to my 401(k). I have a side-hustle real estate LLC that includes passive income from fifteen rental units as well as active income from real estate brokerage related activities. When I started, I committed myself to plowing back 100% of my side hustle net earnings into new investments for ten years to allow compounding. During that time, I planned to cover the tax hit from my 'personal' W-2 funds. The side-hustle has grown such that my W-2 post-tax savings are insufficient to cover my side-hustle tax liabilities each year at tax time.

Question: Is it possible/permissible to open a SEP IRA and make contributions from my real estate LLC while simultaneously maxing out my traditional employer-based 401(k)? If so, will / how could a SEP IRA reduce the immediate tax impact of side hustle earnings, deferring it until retirement distributions? If so, could I do a self-directed SEP IRA from these funds and continue the rental portfolio growth?

[Basit Siddiqi]

@Greg Swartzberg

You may want to reach out to your accountant.

There are limitations on how much you can put away into a SEP based on the income from your business. Rental income won't count towards this calculation. looks like only the brokerage income will.