Employer 401k and self employed SIMPLE IRA

Submitted by Kirk Fogg on Tue, 2023-06-20 15:58

Work full time for a company that offers 401k and contribute the max. Also have small business that own 100% with two part time employees. Starting a SIMPLE IRA. Can owner do max contribution to SIMPLE IRA with out running into max contribution limits?



Submitted by Alan - IRA critic on Tue, 2023-06-20 17:36

No. The owner’s SIMPLE IRA elective deferrals are subject to the SIMPLE IRA limit, but the total of SIMPLE IRA and 401k contributions are also subject to the overall Sec 402(g) limit. Therefore, a max SIMPLE IRA salary reduction contribution will reduce the amount that can be contributed to the 401k, which will now be the 401k limit less the amount contributed to the SIMPLE IRA. To avoid the hassle of excess elective deferral corrections or loss of matching contributions, the owner should plan the deferrals at the start of each year. 

Submitted by William Tuttle on Wed, 2023-06-21 02:01

  • If your taxable income makes you eligible for the qualified business income (QBI) deduction. It would be better to maximize your pre-tax employee deferral limit at your full-time W-2 employer.
  • This is because pre-tax contributions to self-employed employer retirement plans reduce QBI and thus the QBI deduction.

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