If I max my SIMPLE IRA for 2018 through payroll deduction, and have a 2nd business as a sole owner, can I contribute into a SEP

I maxed my Simple IRA from my employer.

I have my own business as a sole owner, can I have a SEP? and is there a maximum contribution limit between all plans?



  1. SIMPLE IRA employee deferrals can be up to 100% of compensation not to exceed the limit (2019 =$13K). There is a SIMPLE IRA catch-up contribution limit (2019 = $3K) for any year you are >= age 50.
  2. Total employee deferrals and/or designated Roth contributions can be up to 100% of compensation not to exceed the limit (2019 = $19K) across all 401k, 403b, SARSEP and SIMPLE IRA plans. The total catch-up contribution limit (2019 = $6K) for any year you are >= age 50 is across all 401k, 403b, SARSEP and SIMPLE IRA plans.
  3. The maximum employer contribution limit is 25% of compensation for both SEP IRA and 401k plans. For self-employed indiviuals this is calculated as 20% of self-employed earned income (business profit – 1/2 SE tax).
  4. You would be better of adopting a one participant 401k plan than a SEP IRA. This would allow you to make total employee deferrals and/or designated Roth contributions up to 100% of self-employed earned income not to exceed ($19K – $13K = $6K). Then you could make employer contributions of up to 20% of self-employed earned income.
  5. If your self-employed earned income was $20K, your maximum SEP IRA contribution would be $20K * 20% = $4K. With a one-participant 401k plan, you could contribute a total of $6K in employee deferrals and/or designated Roth contributions. You could also, make the same $4K employer contribution as a SEP IRA for a total of $6K + $4K = $10K. Note: Employer contributions can not be > (self-employed income – total employee deferrals and/or designated Roth contributions) / 2.
  6. Finally, there is an employee + employer annual addition limit (2019 = $56K) for each separate unaffiliated employer. If you have no ownership interest in your SIMPLE IRA employer, your SIMPLE IRA contributions and employer match have no effect on your businesses annual addition limit. 


Since it is to late to do a 401k solo for 2018,   I am thinking a SEP is best choice.  I have a SEP in place.  I have maxed my SIMPLE ira for 2018.   I own the business.I also own a seperate business as a sole owner.  Can I Max my SEP contribution on top of the SIMPLE contributions made at the other business.   It is commonly owned by me 100%If I can, is there a maximum total amount between the two plans?



  • I mistunderstood your original post. I thought you were a non-owner employee at the SIMPLE IRA employer and then owned an unaffiliated employer. Since you are a 100% owner of both businesses, the two businesses are considered as one business for the purpose of employer retirement plans and contributions.
  • You can not have a different retirement plan for the second business.


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