Rich Carreiro wrote:
- quote -

It doesn't work as well as truly separate employers would work - there's
no advantage to creating separate plans. There's a common
control/ownership test where multiple "employers" are considered a
single one for contribution purposes when they exceed
ownership-percentage levels. Certainly a sole pro who wears two or three
hats fails that test.

The better scenario is a day-job 401k with moonlighting on the side, so
they're truly separate employers...the latter could have its own SEP-IRA
or solo-k. The "separate employer" principle says each has its own
contribution limit, though the $15,500 "salary deferral" limit applies
across all plans in aggregate.

This gets complicated depending on what types of plans are in the mix,
the IRS pub on the topic addresses it. Nolo press used to have a great
book too but it's out of print -- I emailed them about that, they said
they didn't sell enough of them. Strange to me...so many sole-pros out
there, but a guide about setting up a retirement plan (a complicated
topic, addressed very well) didn't sell. While they're able to sell, you
know "dog law" and titles like that!

-Tad

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Will Trice <wtrice[at]notmonitored.com> writes:

- quote -

It works, but I believe there's an integrated limit across all
your business ventures. The total "employer" contribution to
all your solo 401(k)s/SEPs can't be more than around $46,000
(I don't remember the exact 2008 number).

--
Rich Carreiro rlc-news[at]rlcarr.com

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Rich Carreiro wrote:

- quote -

So does that then open up interesting possibilities for the
self-employed? For example, maybe I have one business that's insurance
planning and another that's investment advice. For one I treat myself
as an employee and contribute to a solo-401(k), for the other I open a
SEP. Does this work? Can I do this with a third business, like tax
prep? (Here I'm assuming that all three businesses would be related but
not enough so that the IRS could say that they're a single business).
All subject to receiving enough income, of course.

-Will

william dot trice at ngc dot com

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Will Trice <wtrice[at]notmonitored.com> writes:

- quote -

That's talking about employER contributions. EmployEE salary deferrals
don't figure into the calculation in question.

--
Rich Carreiro rlc-news[at]rlcarr.com

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Rich Carreiro wrote:

- quote -

Are you sure about this? Pub. 560 seems to disagree, see the "More than
one plan." paragraph (third column, pg. 6, 2007 Pub. 560). But perhpas
I'm missing something?

-Will

william dot trice at ngc dot com

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oprah.chopra[at]gmail.com writes:

- quote -

How is your business structured? If it is a sole proprietorship,
the limit is actually 20% of your net business income (net business
income is Sched C profit minus half the SE tax), not 25%. (Well
technically it's 25%, but it's 25% of Sched C profit minus half the
SE tax minus the SEP contribution itself. When you work out the recursion,
it turns out to make the nominal 25% limit an actual 20% limit).

- quote -

Your 401(k) contributions as an employee have no effect
on SEP contributions.

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Is my yearly contribution limit still 25% of my business income ( i.e
10k , assuming 40k in side-business income ) ? Or is it lower since I
max out my 401k?

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oprah.chopra[at]gmail.com writes:

- quote -

Yes.

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My day job provides 401k which I am maxing out (15.5k/year). I also
have a side business that generates around 40k/year. I pay self
employment tax
every year, but can I contribute to a SEP ?

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