Jump to content

Simple plan and SEP plan in the same year?


Guest archimedes_pie
 Share

Recommended Posts

Guest archimedes_pie

Is it permissable to contribute to botha simple plan and a SEP plan in the same year? My wife received a bonus in January with which she contributed the yearly contribution limit to her Simple Plan. Now she is leaving that company and starting her own, so she is going to set up a SEP for herself. Will she be limited in what she can contribute to her new plan?

Thanks,

Link to comment
Share on other sites

An employer can't sponsor a SIMPLE and another plan during the same year, but as I understand it, your wife was an employee in a company that had a SIMPLE and she contributed to it. She can also contribute to a SEP if she has her own business...actually, it is her business that is making a contribution on her behalf.

Ed Snyder

Link to comment
Share on other sites

I agree with Bird. Also, her contributions to the SIMPLE will not affect the amount she is allowed to contribute to her SEP..which means she can contribute to maximum amount to both.

Life and Death Planning for Retirement Benefits by Natalie B. Choate
https://www.ataxplan.com/life-and-death-planning-for-retirement-benefits/

www.DeniseAppleby.com

 

Link to comment
Share on other sites

Guest archimedes_pie

She is leaving the first company where she was an employee, and starting her own separate business. So, with her new buisness, she will be able to put aside 25% of her earnings? What constitues her earnings?

Link to comment
Share on other sites

If she is self employed, the max deduction is 20% of net earnings from self employment ( Schedule C income) reduced by 1/2 of the SECA tax paid. If she incorporates her deduction is 25% of w-2 comp.

Link to comment
Share on other sites

Guest archimedes_pie

Ahh, the contributions and the self employment deduction are excluded from income? So,

(.25NET + NET = GROSS(1-.0675))

& (NET= GROSS.9235/1.25)

& (.25NET = CONTB = .25*.9235/1.25 GROSS)?

That would mean the contribution is roughly 18.47% of your gross earnings. I'll have to check the Self Employment rate (15.3%?)

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...