Clear answer on retirement accounts

[r3d3mption]

At my job I have access to a 401k and a 457b. I have a traditional IRA at Betterment where I rolled my previous retirement account. I started a business this past year and created a SEP IRA through Betterment as well. Currently I am maxing out my 401k and 457b at 18k each. Can I also max out the Traditional IRA, and the SEP IRA?

So can I do 18k + 18k + 5.5k + whatever the SEP IRA contribution ends up being?

[NoStacheOhio]

This provides some clarity, though doesn't address the Roth: http://www.doughroller.net/retirement-planning/sep-ira-for-the-part-time-self-employed-who-also-contribute-to-a-401k/

[johnny847]

At my job I have access to a 401k and a 457b. I have a traditional IRA at Betterment where I rolled my previous retirement account. I started a business this past year and created a SEP IRA through Betterment as well. Currently I am maxing out my 401k and 457b at 18k each. Can I also max out the Traditional IRA, and the SEP IRA?

So can I do 18k + 18k + 5.5k + whatever the SEP IRA contribution ends up being?

No you cannot, as an employee.*
With respect to SEP IRAs

Because a SEP-IRA is a traditional IRA, you may be able to make regular, annual IRA contributions to this IRA, rather than opening a separate IRA account.  However, any dollars you contribute to the SEP-IRA will reduce the amount you can contribute to other IRAs, including Roth IRAs, for the year.

Furthermore, even if you decided to open a SIMPLE IRA for yoru business instead, you can't contribute to that at all if you max your job's 401k.

The amount of salary deferrals you can contribute to retirement plans is your individual limit each calendar year no matter how many plans you're in. This limit must be aggregated for these plan types:

• 401(k)
• 403(b)
• SIMPLE plans (SIMPLE IRA and SIMPLE 401(k) plans)
• SARSEP

Source: https://www.irs.gov/Retirement-Plans/How-Much-Salary-Can-You-Defer-if-You%E2%80%99re-Eligible-for-More-than-One-Retirement-Plan


*But you can make employer contributions to your SEP IRA while maxing your tIRA. Which would equal 25% of your compensation (which is close to your net profit, but not quite, because of self employment taxes).

[Geekenstein]

Since NoStache mentioned a Roth...

As long as you are under the income maximum you can contribute to a Roth, and since you are saving money by deferring income to your 401k why not toss that money in a Roth?  That's me applying my DW's shopping logic to investing.

[r3d3mption]

At my job I have access to a 401k and a 457b. I have a traditional IRA at Betterment where I rolled my previous retirement account. I started a business this past year and created a SEP IRA through Betterment as well. Currently I am maxing out my 401k and 457b at 18k each. Can I also max out the Traditional IRA, and the SEP IRA?

So can I do 18k + 18k + 5.5k + whatever the SEP IRA contribution ends up being?

No you cannot, as an employee.*
With respect to SEP IRAs

Because a SEP-IRA is a traditional IRA, you may be able to make regular, annual IRA contributions to this IRA, rather than opening a separate IRA account.  However, any dollars you contribute to the SEP-IRA will reduce the amount you can contribute to other IRAs, including Roth IRAs, for the year.

Furthermore, even if you decided to open a SIMPLE IRA for yoru business instead, you can't contribute to that at all if you max your job's 401k.

The amount of salary deferrals you can contribute to retirement plans is your individual limit each calendar year no matter how many plans you're in. This limit must be aggregated for these plan types:

• 401(k)
• 403(b)
• SIMPLE plans (SIMPLE IRA and SIMPLE 401(k) plans)
• SARSEP

Source: https://www.irs.gov/Retirement-Plans/How-Much-Salary-Can-You-Defer-if-You%E2%80%99re-Eligible-for-More-than-One-Retirement-Plan


*But you can make employer contributions to your SEP IRA while maxing your tIRA. Which would equal 25% of your compensation (which is close to your net profit, but not quite, because of self employment taxes).

Just to make sure I understand...

I COULD max out my 457, 401k, tIRA, and the EMPLOYER portion of the SEP IRA?

So theoretically... 18k + 18k + 5500 + 25% of my net business profit?

[johnny847]

At my job I have access to a 401k and a 457b. I have a traditional IRA at Betterment where I rolled my previous retirement account. I started a business this past year and created a SEP IRA through Betterment as well. Currently I am maxing out my 401k and 457b at 18k each. Can I also max out the Traditional IRA, and the SEP IRA?

So can I do 18k + 18k + 5.5k + whatever the SEP IRA contribution ends up being?

No you cannot, as an employee.*
With respect to SEP IRAs

Because a SEP-IRA is a traditional IRA, you may be able to make regular, annual IRA contributions to this IRA, rather than opening a separate IRA account.  However, any dollars you contribute to the SEP-IRA will reduce the amount you can contribute to other IRAs, including Roth IRAs, for the year.

Furthermore, even if you decided to open a SIMPLE IRA for yoru business instead, you can't contribute to that at all if you max your job's 401k.

The amount of salary deferrals you can contribute to retirement plans is your individual limit each calendar year no matter how many plans you're in. This limit must be aggregated for these plan types:

• 401(k)
• 403(b)
• SIMPLE plans (SIMPLE IRA and SIMPLE 401(k) plans)
• SARSEP

Source: https://www.irs.gov/Retirement-Plans/How-Much-Salary-Can-You-Defer-if-You%E2%80%99re-Eligible-for-More-than-One-Retirement-Plan


*But you can make employer contributions to your SEP IRA while maxing your tIRA. Which would equal 25% of your compensation (which is close to your net profit, but not quite, because of self employment taxes).

Just to make sure I understand...

I COULD max out my 457, 401k, tIRA, and the EMPLOYER portion of the SEP IRA?

So theoretically... 18k + 18k + 5500 + 25% of my net business profit?

Yes, but with a slight adjustment for FICA taxes for the SEP IRA. You can find the actual formula in Publication 560.
And there's a 53k limit on employee + employer contributions for the SEP IRA, but you'd have to make a lot of profit to worry about that one.

[AdrianC]

There are deduction limits for the traditional IRA:

https://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/2016-IRA-Contribution-and-Deduction-Limits-Effect-of-Modified-AGI-on-Deductible-Contributions-If-You-ARE-Covered-by-a-Retirement-Plan-at-Work

[dandarc]

Just to make sure I understand...

I COULD max out my 457, 401k, tIRA, and the EMPLOYER portion of the SEP IRA?

So theoretically... 18k + 18k + 5500 + 25% of my net business profit?

Roughly, the formula for the maximum employer-side SEP IRA contribution is:

If you are taxed as a proprietor, 20% of (net income less 1/2 self employment tax).

If you are taxed as a corporation: 25% of your W-2 wages.

[r3d3mption]

Maxing out my 401k and 457b leave me with $37,340 in taxable income (after healthcare, and life/ad&d deductions). I expect to make about 20 - 30k net profit (before any SEP IRA contribution) through the side business this year, so I should still be under the income limit to contribute the full amount to the TIRA. If I end up doing better than that with the business, I'll find some more expenses to get me back down to the appropriate point. And if I do so well, that doing so isn't possible... well I guess that isn't a terrible problem to have.