Author Topic: Can I Contribute Max To 401k & Also some SEP IRA  (Read 361 times)

stashing_it

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Can I Contribute Max To 401k & Also some SEP IRA
« on: April 21, 2019, 01:34:43 PM »
I max out my 401k at work, which means I will do 19,000 before tax, and with the total before tax, after tax, and employer contribution I will hit the max of 55,000 / 56,000  or whatever it is this year.

Additionally, I did a backdoor roth of 6,000

My question is,   I also have some income from a side business I have that is unrelated to work.  I write books and sell them on Amazon.   As far as I can tell, I can open up an  SEP IRA and contribute 20% of the net income from that to the SEP IRA.

But what I am having trouble figuring out is how the limits from the SEP IRA interact with the limits from the 401k / roth IRA.

i.e. if I max out the 401k to the 56k (or whatever it is this year)  can I still contribute to the SEP IRA ?

terran

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Re: Can I Contribute Max To 401k & Also some SEP IRA
« Reply #1 on: April 21, 2019, 03:45:34 PM »
Yes, you can.

The SEP will mess up your backdoor Roth, however, as it will count as IRA basis which will will have to converted pro rata (in proportion) with your non-deductible IRA contributions. For this reason you might consider opening a solo 401(k) instead.

If you do open a solo 401(k) you won't be able to contribute to the employee salary deferral portion (the $19k limit) because that's combined across all plans, but you can contribute the same amount that you can contribute to a SEP IRA.

The $56k limit is per plan, except if one of them is a 403(b) as that combines limits with some other plans.