IRA and Simple

[S T]

Schedule C t/p set up a Simple Plan mid way in 2006 (5/06) from Jan-May he was contributing to his own IRA plan, then when he initiated the SIMPLE for he and one employee began making the employee contributions and his own.

I understand that if the employer (t/p) has a SIMPLE plan they can not have another plan in place. So what becomes of the IRA contributions from Jan-May to the IRA, are they just non deductible on form 8606?

Sandy

[Bees Knees]

An IRA is not considered another employer plan. A taxpayer can contribute to his or her SIMPLE IRA and his or her Roth or Traditional IRA, and not affect the SIMPLE IRA.

The deduction for the contributions to the Traditional IRA, however, is affected by the SIMPLE IRA contributions. The taxpayer is considered an active participant in an employer plan, so therefore, the Traditional IRA contributions may be partially or fully non-deductible, depending on the taxpayer's AGI.

[S T]

Here I am

Here I am mixing apples and oranges again.

Thanks Bees for the clarification, my software did limit the IRA when I checked the employer plan.

Sandy

[Rlmea]

What about if self-employed (SEP) & employed by someone (SIMPLE)

Can one who has self-employed income, contribute the max allowed to their SEP, based on the net s/e income calculation, as well as participate as a W-2 employee in their employers' SIMPLE plan? Can this same person also contribute to a regular IRA (subject to the income limitations) or does the SIMPLE count as the IRA. What I'm getting at are these contributions allowed, as long as the aggregate amount does not exceed $42,000?

Robin