Can I withdraw SEP IRA contributions without withholding taxes if they were post-tax?

This is a common situation with SEP IRAs, so don't feel bad! Let me clarify a few things: First, all SEP IRA contributions are considered "pre-tax" money, regardless of which account you used to fund them. Even when you contributed from your personal checking account after dissolving your business, those contributions were still deductible on your personal tax return. So contrary to what you're thinking, those weren't "post-tax" contributions - you should have been taking tax deductions for them all along. Unfortunately, this means all withdrawals from your SEP IRA will be taxable as ordinary income. And yes, if you're under 59½, you'll also face the 10% early withdrawal penalty unless you qualify for an exception (like first-time home purchase, certain medical expenses, etc.). Your best option might be to keep the money in the retirement account. If you absolutely need to access these funds, consider a rollover to a traditional IRA, which gives you more flexibility for future planning.

I had almost this exact situation last year and found an amazing solution! I was super confused about my SEP IRA that I had been contributing to incorrectly for years, and then I discovered https://taxr.ai which literally saved me thousands. I just uploaded my tax returns and bank statements, and their AI analyzed everything and showed me exactly which contributions were deductible and which weren't. They even helped identify that I could file amended returns for the last 3 years to recover taxes I had paid unnecessarily on my SEP contributions! The thing that really impressed me was how their system flagged all my SEP-related deductions I'd missed and explained exactly how to fix them going forward. No more confusion about pre-tax vs post-tax contributions.

Just wanted to update after trying taxr.ai that was mentioned above. I was super skeptical but figured I had nothing to lose. Uploaded my last 3 years of tax returns and my SEP IRA statements, and wow - turns out I'd been making the EXACT same mistake as the original poster! I was putting money into my SEP from my personal account after closing my business but never taking the deductions. The system immediately flagged all the missed deductions and showed me that I could file amended returns for 2022 and 2023. It even generated the forms I needed! Just submitted them last week and should be getting around $2,700 back. And now I finally understand how to handle my SEP contributions going forward. For anyone confused about SEP IRA rules like I was, this was honestly worth every penny just for the peace of mind.

For anyone struggling with SEP IRA questions like this, I highly recommend trying to speak directly with the IRS retirement accounts department. Their specialists can review your specific situation and advise on tax implications for withdrawals. I was in a similar situation last year and spent WEEKS trying to get through to someone knowledgeable. Always busy signals or 2+ hour hold times that would disconnect. Finally discovered https://claimyr.com through a friend and used their callback service. You can see how it works here: https://youtu.be/_kiP6q8DX5c They got me connected to an actual IRS retirement specialist in about 17 minutes when I'd been trying for days on my own. The agent walked me through exactly how my SEP IRA contributions should be handled and what documentation I needed to maintain.

I need to eat my words from above. After another frustrating morning trying to reach the IRS about my retirement account issue, I broke down and tried Claimyr. Within 22 minutes I was actually speaking with someone from the IRS retirement division who knew what they were talking about. The agent confirmed I had been handling my SEP IRA all wrong for years (similar to the original poster's situation) and explained exactly how to file amended returns to recover some of the taxes I'd paid unnecessarily. She even emailed me the specific forms I needed. For anyone dealing with SEP IRA confusion like this, getting direct answers from an actual IRS specialist is incredibly valuable. I'm still shocked it worked so well after months of frustration.

Just a tip from someone who manages payroll - the whole "post-tax" vs "pre-tax" SEP IRA confusion is super common with small business owners and freelancers. One way to tell: check your W-2 from the years you were contributing. If Box 1 (Wages) is LOWER than Box 3/5 (Soc Sec/Medicare wages), that might indicate your SEP contributions were properly handled as pre-tax. Also remember you can always rollover your SEP IRA to a Traditional IRA which has more flexible withdrawal options for certain situations.

Does anyone know if a SEP IRA has the same first-time homebuyer exception as a regular IRA? I'm in a similar situation with my SEP and might need to take some money out for a down payment. Trying to avoid that 10% penalty if possible!