He suggested that the client should move a portion of the retirement savings into a 401(k) Roth account, an employer-sponsored investment savings vehicle funded with after-tax dollars. "Although it doesn’t help them lower their current income, it will come out tax free in the future," he said.
As for SEP IRAs in general, Nadeau stressed that they still can be valuable for some. "There are still many business owners who will continue to benefit from tax-deductible contributions, and there could be situations where using tax-deductible contributions may actually get certain business owners under the income threshold for qualifying for the 20% pass-through deduction," he acknowledged. "The big thing to realize is that this is no longer a cut-and-dry approach."