Person with 401k at work and self employment SIMPLE?

[Guest mhalvor]

Can an individual who is covered by a 401(k) at their "day" job and contributes the maximum allowable to the plan (assume $15k) and also has a sole proprietorship establish a SIMPLE IRA to reduce their self employment income?

[Archimage]

This person has a 402(g) limit of $15,000 and another $5,000 if over age 50. I will assume this person is not over age 50. If they contribute the max to their 401(k), they cannot contribute to a SIMPLE. I would recommend doing a SEP. You are limited to contribute 25% of the income but it is better than nothing.