Rich Carreiro wrote:
- quote -

It's my understanding that the self-employment limitations
relating to the maximum combined contribution are
independent of the limitation for a defined contribution
plan as an employee. The amount (I thought it was $44K for
2006) is determined by reference to the same IRC section.

If you have a 401(k) or 403(b) with an employer the employee
max is $15K and the combined max is $44K. If you have a
408(k) (SEP-IRA) as a self-employed taxpayer, the limitation
is also $44K. It is technically possible for one taxpayer to
contribute (counting the employer contribution) $88K. Very
unlikely, but possible.

The one area that is a little fuzzy is if the self-employed
individual started a SIMPLE-401K rather than a SEP-IRA after
contributing to a 401K with his employer. I think that
person would have one employee elective limitation of $15K
for the year, but would have two separate limitations for
the employer match as an employee and the profit
contribution as a self-employed individual.

Before I forget, there is a nice calculator at fincalc.com
that will compute the maximum contribution for a
self-employed individual to a variety of retirement plans.
http://www.fincalc.com/qua_12.asp?id=6

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

"A.G. Kalman" <glendale202-mtmtax[at]yahoo.com> writes:

- quote -

Great!

But I'm still curious about what happens between employ*er*
contributions to the 401(k) and the contributions to the
SEP-IRA?

To be specific (though admittedly unrealistic in this case),
what if the employee contributed the full $15,000 to the
401(k) and the employer contributed $30,000, bringing the
employee up to the overall $45,000 contribution limit.

Given that, could any money be contributed to the SEP-IRA?

Or slightly less unrealisticly, the employee contributes
$15,000 to the 401(k) and the employer makes a $7,000 match.
And the taxpayer has enough self-employment compensation to
support a $25,000 SEP-IRA contribution. Can the full
$25,000 SEP-IRA contribution be made, or is the contribution
limited to $23,000 that would take the total of all
contributions to $45,000?

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Rich Carreiro wrote:

- quote -

No coordination required between employee contributions to a
401(k) of an employer and contributions to a SEP-IRA as a
self-employed taxpayer. You can max out both independent of
each other.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Taxpayer has a day job with Employer X. X has a 401(k)
that TP participates in. X has some level of contribution
matching. TP also has self-employment income and wants
to set up a SEP-IRA for that. TP is to young to qualify
for any "catch-up" contribution boosters. I know about
the 25% of net SE earnings limit on SEP-IRA contributions,
but aren't sure how the hard dollar amount limits for
401(k)s and SEP-IRAs interact with each other.

Question(s):
* What is the hard limit on the sum:
TP's 401(k) contribution + X's match + SEP-IRA contribution
* What is the hard limit on the sum:
X's match + SEP-IRA contribution

Thanks!

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >