- quote -

As for whether employer matches to the 401k and non-contributory
employer defined benefit costs also count towards the $40,000, I don't
know. I suspect the 401k match does, but am less certain how defined
benefit plans figure in this.

-HW "Skip" Weldon
Columbia, SC

On Thu, 2 Oct 2003 03:58:33 CST, tcp277[at]yahoo.com (C. Todd) wrote:

- quote -

"Highly compensated" only applies to your regular job and the earnings
therefrom. I am not sure whether you are included in this or not, so
as said in the previous post, just ask them.

-HW "Skip" Weldon
Columbia, SC

Skip, thanks for your reply!

I think that clears it up a bit for me.. So the $40,000 is the
combined limit, since with my sole-proprietor SEP, I am the employee
AND the employer; with the 401(k) it's a separate employer so the SEP
doesn't affect the $12k limit.

I'm a little confused on the "highly compensated" part. My pay from my
regular w-2 job employer was $76,000 -- didn't think that was defined
as "highly compensated." They're not aware of my self-employment
income; and IMHO, it's none of their business.. How could my
self-employment income and the 401(k) plan document have any play with
each other?

If I'm making money from separate employers, and the two add up to the
"highly compensated" definition, does that mean I have to tell the
401(k) plan or something?

A bit more confused now.

-Chris

"HW \"Skip\" Weldon" <skip5700[at]yahoo.com> wrote in message news:<untinv0mgp17342tpl6b3go5sj7nskvr1c[at]4ax.com> ...
- quote -

On Mon, 29 Sep 2003 10:47:49 CST, tcp277[at]yahoo.com (C. Todd) wrote:


- quote -

If you're lucky, Ed Zollars will check in and correct any errors in my
response. He is the final word on this kind of thing, IMO.
Until then...

As long as your 401k contribution is Ok with your plan document, your
contribution is within statutory (IRC) guidelines. (100% of comp up
to $12,000 annually, with $2,000 more for over-50. This applies to
employee contributions.) But since individual plans are allowed to be
more restrictive, or you might be hit with "highly compensated"
limits, it's best to check the $8,000 number with your HR folks or the
plan custodian.

As for SEP, the statutory limits are 20% of comp (self employed income
less self employed expenses) up to a max contribution of $40,000.

I suspect that the confusion comes in with the $40,000. It's an
OVERALL limit imposed by Section 415, and means that the total of 401k
and SEP cannot exceed $40,000. Soooo... as long as your 401k
contribution doesn't conflict with your plan document, and your SEP
set asides don't exceed 20% of SE income and the total of both don't
exceed $40,000, I see no problem.

Would be interested in other posters views on this. As everyone
knows, I am not bullet-proof. <grin

-HW "Skip" Weldon
Columbia, SC

I've looked around and gotten varied answers on this question, so I'm
hoping someone enlightened here can maybe give me an answer (and
perhaps even point out the IRC that specifies that I can do this..)
Last time I asked I got a halfhearted response, and found another post
that instantly contradicted what I was told, so here goes again:

I'm currently working for a company AND I have a separate
sole-proprietor (Schedule C) side business.

I'll be making about $76,000 at my "regular" W-2 job, and if all stays
on schedule I will be putting $6,000 into the 401(k) at my W-2 job.

I'll be making about $31,000 with my consulting business, and I have a
SEP-IRA set up for myself (I am the only employee/employer.) The
maximum contribution comes to about $6,000 here, which I will be
contributing.

I would, however, like to increase my W-2 job's 401(k) contributions
for the last quarter of this year, perhaps adding another $2,000 above
and beyond what I had planned, to a total of $8,000. Can I do this
without affecting my SEP limits?

Basically, I am wondering if my self-employed SEP contributions (as an
employer, I imagine is how it works) affect my maximum 401(k)
contributions.

I've heard some say that it will -- but then others mention the
"separate employer" rule, and that since my SEP-IRA contributions are
really "employer" contributions, not "employee deferrals", it's OK.
Still sounds a little sneaky.

Do SEP Employer contributions truly not count against the $12,000
elective deferral limit if you're a self-employed sole proprietor?

Thanks in advance.. Only have a few days to make this decision! (end
of Q3!)

-Chris

P.S. No need for discussion of SAR-SEP (this is not) or SIMPLE
needed.. Also I realize there is a thing such as "employee"
contributions to a SEP that are considered traditional IRA
contributions, but this is also irrelevant..! (just to avoid
confusion)