How do I categorize SEP IRA?

tzahicotzahico Member Posts: 6

Hello,

I have a SEP IRA account with Vanguard, and I transfer $xxxx from my company's (C-Corp) funds every month to it.

Right now I am categorizing it as Owner Investment / Drawing.

Is it the right category? Should I also define anything under the Payroll section?

Thanks in advance!
Isaac

Comments

  • QaisEQaisE Administrator Posts: 72 admin

    @tzahico Hey there! Thank you for sharing your workflow on this. Currently, categorizing the transfer to your SEP IRA account as an Owner Investment / Drawing is a suitable work around for categorizing this transfer. In general, if you want to create a transfer transaction from one account to another, this help center link explains that process. In this case, it could also be beneficial to create an Asset account for SEP IRA account that you should be able to categorize transfers to. Otherwise, you are working through the process correctly as is - so keep it going!

  • tzahicotzahico Member Posts: 6

    Thank you!

    Just want to confirm - There's no need to specify anything on Payroll since taxes are not deducted for SEP IRA, right?

    Thanks,
    Isaac

  • MikegMikeg Member Posts: 772 ✭✭✭

    @tzahico,
    Actually SEP payments are considered pension expense for the company. They should not be classified as an owners draw.

  • tzahicotzahico Member Posts: 6

    Thank you, Mike!

  • MikegMikeg Member Posts: 772 ✭✭✭

    @tzahico,
    You are welcome. Also, SEP payments are not a payroll item, other than how the contribution is computed. Payroll taxes do not come into play with them either. They are not shown on a W-2.

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