Having two retirement plans – Simple IRA and SEP IRA
I have a client issue that I would appreciate some advise on.
My client is a Real Estate Broker (owns her own firm) and currently has a SIMPLE IRA for the firm. The brokerage firm has 3 employees including herself, all of them receive W2 income from the brokerage firm and all three are contributing to the SIMPLE IRA. My client has contributed the maximum $10,500 for the year and the company matched 2%. She would like to defer more money for retirement.
In addition my client also has a number of independent real estate agents at the firm and they all work solely on commission and receive 1099s each year. My client also receives commission from any sales that she makes and also receives a 1099 each year in addition to her W2.
My question is – can she open up a SEP IRA or a Solo 401(k) plan, in addition to the company’s SIMPLE IRA plan? Assuming she contributes to the new plan using her 1099 income. Also are these two businesses too closely related to allow her to do this?
Thanks,
Jay
Permalink Submitted by Denise Appleby on Thu, 2008-04-03 07:21
No. She can’t.
Since she owns both businesses 100%, the businesses are considered under [url=http://www.retirementdictionary.com/Controlled-group.htm%5Dcommon-control%5B… and are treated as one business for retirement plans purposes. Therefore, consistent with the one-plan-rule for [url=http://www.retirementdictionary.com/simpleira.htm%5DSIMPLE IRAs[/url], she cannot maintain any other [url=http://www.retirementdictionary.com/Employer-sponsored-plan.htm%5Demployer sponsored plan[/url]for any year she maintains a SIMPLE IRA.