Simple & 4K limits

[mschwechter]

I have an employee who is in a simple plan (w2 wages).

Also self employed with Schedule C income.

If he establishes a 401(k) for his self employed income, and he max's out in the simple, what is his limit in the 4K? $15K less his max simple contribution?

Thanks

[saabraa]

what is his limit in the 4K? $15K less his max simple contribution?

Basically, you're correct. In this case, the 402(g) individual limit of $15,000 is reduced by the SIMPLE elective deferrals. I presume no other glitches; e.g. self employment compensation is large enough to cover the $5,000 or so of elective deferrals to the 401k. And of course you already know about the 25% employer contribution permitted in the 401k, over and above the elective deferrals.