If a person has some self-employment income and some W2 income, can they fund a traditional IRA and then also fund a SEP IRA or solo 401k?
Do the traditional IRA contributions count against either SEP IRA or solo 401K contribution limits?
Here's the situation:
I'm self-employed with an S corp. The S corp pays me a salary (W2), and plus K1 profit distributions. So I've had a SEP-IRA for years, which is helpful because income is variable and it's easiest to wait until year-end to make contributions.
My CPA has advised opening a solo 401K instead, which does allow for larger contributions, but it looks like you have to make those contributions through payroll deductions throughout the year, which is hard because my income is so variable. Also, I honestly don't earn enough to max it out right now anyway.
Add this wrinkle--it this uncertain economy, it's sometimes necessary to take a W2 job, outside of the S corp, to make ends meet. That job doesn't offer a 401k or employer plan, but at least a traditional IRA would be an option.
It's often not clear until year-end how much income I have to work with, or how much came from the S corp vs outside W2 income.
Because I can't afford to contribute a lot regardless, I'm not really at risk of over-contributing to either, I just want to know what the rules are in this situation.
