Is Pausing Contributions to SEP I.R.A.s a Good Move?

Self-employed workers use the vehicles to save for retirement. As the coronavirus concerns build, taking a break could be smart. “I’m self-employed. Given economic uncertainty around the coronavirus outbreak, should I still make a contribution to my SEP I.

R. A.? ” Contributing to a retirement account warrants some caution right now for self-employed people, since they don’t get a regular paycheck. Self-employed people with SEP I.

R. A. s (short for “simplified employee pension individual retirement arrangements”) often make annual contributions at tax time, once they wrap up their tax returns and see how their income shakes out. They can save 25 percent of their earnings, up to certain limits.

SEP contributions are tax deductible and can be made up to the tax filing deadline, or later if the taxpayer gets a six-month extension to file. This year, given the sudden slowdown in economic activity, it might be wise to use a filing extension, postpone a SEP contribution and instead build a reserve for paying bills if needed, said Patrick Healey, a financial planner in Jersey City, N. J. Mr.

Healey said he had a SEP I. R. A.

“and might just do that himself.”

“Right now,” he said, “cash is king. ” Later in the year, the economic outlook should be clearer, and you can make a contribution if you feel secure. Check with your tax adviser, though, before deciding. It’s usually easy to get a six-month filing extension from the Internal Revenue Service by filing a form.

Most years, that gives you until Oct. 15 to make a SEP contribution and file your return. (Delayed contributions aren’t generally available with traditional or Roth I. R.