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SIMPLE IRA & 403(b)


Guest wjr
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I realize an organization can not establish a SIMPLE IRA if they have any other plan in existence for which contributions are being made, including a 403(B) tax sheltered annuity.

Situation: A person owns a for profit business and has set up a SIMPLE IRA and the spouse also works in this business and receives compensation along with working part-time at a tax-exempt 501©(3) organization that offers a voluntary 403(B) plan.

I realize that generally an employee could participate in both and that the deferral limits must be aggregated. However, my question is whether this spouse (possibly considered an owner and therefore in "control" of both the for-profit and the 403(B) account) can actually participate in both? And, if did participate in the 403(B) only, whether that would have any effect on the for-profit business ability to offer the SIMPLE at all. much less be excluded from participation somehow?

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For this 403(B) participant (if an owner in the for-profit or in the non-profit), their employer(s) would be considered under the current law to have exclusive control of the annuity contract. Treas. Reg. 1.415-7(h)(2).

Generally, under the Code Section 415 regulations, the opposite is true and the participant (not their employer) is deemed to have exclusive control of the 403(B) annuity contract. Treas. Reg. 1.415-7(h)(1).

Please keep in mind that the very rules for determing the indicia of ownership vary b/w tax-exempt entities and taxable entities.

In non-stock corporations the "control test" for common ownership works differently.

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