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SIMPLE IRA Cont limit-combine with 401k?


Guest Mick Davids
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Guest Mick Davids

A new employee joined a firm which sponsors a SIMPLE IRA. The employee has particpated in the previous employers 401(k) this calendar year. What limit applies to the employee for deductions to the SIMPLE IRA?? Thanks, Mick

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Guest Fishchick

The overall 1999 limit between the two plans is $10,000. The employee can defer up to $6000.00 in the SIMPLE IRA if that does not push him over $10,000 for the total of the 401k deferrals and the SIMPLE IRA deferrals.

In other words, the amount the employee can defer is $10,000 minus the previous 401k deferrals, but not more than $6,000 (or 100% of compensation, if less).

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