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Lawrence B. Keller, CLU, ChFC, CFP®
Mar 26, 2008 - 12:47PM
Re: Moonlighting income and funding spouse's self-employed 401k

Sunil-

Unless a pension administrator is willing to "backdate" your 401(k) plan document, it is too late to establish one for 2007.

However, you have until April 15, 2008 to set up an SEP-IRA (Simplified Employee Pension) and deduct up to 20% of your net self employment income to a maximum of $45,000 (2007 SEP Limit).

Unfortunately, your wife will not be able to contribute as she is not working and is not on your payroll.

However, she can contribute to an IRA, which may or may not be income tax-deductible, depending on your circumstances.

Hope this helps.

Larry

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