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401k and SIMPLE total deferral limit


Guest Peggy806
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Guest Peggy806

An employee has a retirement plan in which he can make the maximum deferrals of $16,500. He also has another business and wants to set up a SIMPLE plan and deduct $11,500 for himself. Can a person do this or would he be limited to the $16,500 for 2011?

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Guest Peggy806
You are referring to the 402(g) limit and it is one limit per person per calendar year. His limit is $16,500 unless he is eligible for catch-up

I wanted to make sure that the 11,500 was included in the 402(g) limit. I know that the 402(g) is one limit per person per year and I didn't think he could also make a deferral to his SIMPLE after the 402(g) limit was reached, but I wanted to make sure that was correct. Just to confirm, the 402(g) limit includes deferrals into a SIMPLE plan in addition to deferrals in a 401k plan?

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Guest Peggy806
You are referring to the 402(g) limit and it is one limit per person per calendar year. His limit is $16,500 unless he is eligible for catch-up

I guess I am mainly asking: If a person reaches his 402(g) limit in a year, does that mean he also has met his 408(p)(2)(E) limit of 11,500 for that year so that no deferrals may be made to the SIMPLE plan?

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Yes.

Combine the two together.

So, ignoring the catchup:

If the 401(k) is $6,000, the SIMPLE can't exceed $10,500 (overall 402(g) max $16,500)

If the 401(k) is $1,000, the SIMPLE can't exceed $11,500 (SIMPLE max $11,500)

If the 401(k) is $16,500, the SIMPLE max is zero

If the SIMPLE is $6,000, the 401(k) can't exceed $10,500 (overall 402(g) max $16,500)

If the SIMPLE is $1,000, the 401(k) can't exceed $15,500 (overall 402(g) max $16,500)

If the SIMPLE is $11,500, the 401(k) can't exceed $5,000 (overall 402(g) max $16,500)

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