Two plans in the same year; simple and individual 401k
Hello,
A dentist has a Simple IRA plan for him and his employees. He’s made enough to fully fund the Simple within the first six months of 2015; and does so.
He then sells the practice and becomes an “independent contractor” for the same practice he just sold. He’ll be paid on a 1099 and file a schedule C for the last half of 2015.
Can he now open an Individual 401k as the independent contractor and fund it up to the annual limits (we’ll assume he’ll make enough) less what went into the Simple?
Thanks
Permalink Submitted by Alan - IRA critic on Thu, 2015-06-11 02:49
The 402g elective deferral limit of 18k applies to the 401k plan and the salary reduction contributions to the SIMPLE IRA in total. Therefore, for 18k must be reduced by the SIMPLE salary reduction contributions. The 415c DC limit of 53k for the solo K is not affected by the SIMPLE IRA since the SIMPLE is not considered a DC plan.