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mrk72
New Member

Can I max both my employers 401k AND my SEP sole-proprietor plan? Do they have separate limits or a combined yearly limit? I work 50% for myself and 50% for employer.

I have imported my W-2 from my employer and maxed out my 401k contribution there. I also have a sole proprietorship with no employees (not an LLC). TT asked if I wanted to contribute to my SEP. I clicked "maximize my contribution" and it gave me a total. Does the IRS consider this as 2 different jobs with 2 different contribution totals or am I unable to contribute at all to my SEP given that I maxed out 401k employer plan. Thanks!
2 Replies
KarenM90
Level 11

Can I max both my employers 401k AND my SEP sole-proprietor plan? Do they have separate limits or a combined yearly limit? I work 50% for myself and 50% for employer.

Yes, you can contribute to both plans .

 

TurboTax will help you calculate the maximum contributions.

 

The IRS does consider these two separate companies as long as they are not under common control.

 

Here is an IRS link that addresses this:  SEP and 401K

 

 

 

 

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dmertz
Level 15

Can I max both my employers 401k AND my SEP sole-proprietor plan? Do they have separate limits or a combined yearly limit? I work 50% for myself and 50% for employer.

Your participation in your employer's 401(k) has no bearing on the amount that you are eligible to contribute to the SEP IRA based on your net profit from self-employment.  SEP contributions are employer contributions and the limit on employer contributions at one employer is determined separately from the limit on employer contributions at another employer.

 

Be aware, though, if the two employers have similar ownership, the two employers might be considered to be a single employer with respect to establishing a retirement plan.  I assume that you do not have a substantial ownership interest in the employer with the 401(k).

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