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Can a small business owner offer both a SIMPLE IRA and a SEP IRA?

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Not according to the IRS FAQs

Can I contribute to my SIMPLE IRA plan if I maintain another retirement plan?

Generally, you can’t contribute to a SIMPLE IRA plan for a calendar year if you maintain another retirement plan and any of your employees receives an allocation or accrues a benefit under the other plan during that calendar year (the “one-plan requirement”).

However, you can have a SIMPLE IRA plan even though you maintain another retirement plan if:

  • The other plan is only for employees covered under a collective bargaining agreement, and the SIMPLE IRA plan excludes these employees; or
  • Your business was part of an acquisition, disposition or similar transaction during the current calendar year or the 2 prior calendar years, and only your separate employees participate in the SIMPLE IRA plan.

If you maintain another retirement plan and one of the exceptions above does not apply, you must correct this mistake.

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The code citation is 408(p)(2)(D), which cross-references 219(g)(5)(A) & (B) which is a list that includes 408(k).

SIMPLE IRA is 408(p), SEP IRA is 408(k).

Kurt Vonnegut: 'To be is to do'-Socrates 'To do is to be'-Jean-Paul Sartre 'Do be do be do'-Frank Sinatra

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  • 4 weeks later...

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