IRA and SIMPLE IRA Together
Hello,
I have a business owner client who has a Traditional IRA ytd.
The client is asking if he can open up a SIMPLE IRA today and contribute to it for the remainder of the year.
my understanding is that SIMPLEs don’t allow any other plans simultaneously in a given year.
is it possible to set up one, stop contributing to a Traditional IRA, and continue contributing more to the newly-set-up simple ira during the year?
please help Thanks!
Permalink Submitted by Alan - IRA critic on Fri, 2018-06-29 14:57
The restriction to SIMPLE IRAs only applies to plans adopted for the business. Both TIRAs and Roth IRAs are personal IRA plans and contributions in the same year can be made to personal IRAs as well as to a SIMPLE IRA plan for the business. However, if client is participating in a SIMPLE IRA his income may be too high for him to deduct a TIRA contribution, and in that case might consider a Roth contribution. A Roth also has income limits but they are higher than the income limits to deduct a TIRA contribution.