SIMPLE IRA and 401k

[Guest John P.]

I have a relatively unique question. I work for an employer who has a SIMPLE IRA plan and I also have a side business and generate around $30K per year in income.

My first question, which will affect the second, is can I participate in both. Can I have the SIMPLE (under my employer....I am only an employee, not an owner) and also a 401K?

If yes, what are my contribution limits? For example, could I make SIMPLE contributions and my full $18,000 in elective deferrals with the 401K?

Thanks in advance...I really appreciate it.

[Lou S.]

http://www.irs.gov/Retirement-Plans/Retirement-Plan-FAQs-Regarding-Contributions-How-much-can-I-contribute-to-my-self-employed-SEP-plan-if-I-participate-in-my-employer%E2%80%99s-SIMPLE-IRA-plan%3F

Assuming you max out the Simple IRA you can put the difference into the 401(k) Plan essentially - 401(k) limit minus what you contributed to SIMPLE-IRA. That covers the deferral part.

You could also make an employer contribution of up to 25% of eligible pay to the 401(k) plan. If you are a corp with $30K of W-2 income then that would be $7,500. If you are sole prop. with Sch C net income of $30K it is a bit more complicated but there are a ton of calculators in threads on this site if you search and on line that can help you determine the max but is should come out in the neighborhood of an additional $5,500.

[austin3515]

You could also set up your own SIMPLE IRA and make up the difference to $18,000 in that plan. If you're 50, you ought to be able to get to a total of $24,000 between the two SIMPLEs (plus the SIMPLE IRA employer contribution of up to 3%).