SIMPLE (or SEP) and a Roth?

Submitted by Gregg Lynch on Fri, 2020-09-18 19:11

Young couple; wife woks as an employee, no retirement plan offered by her employer. Husband is self-employed, filing his business income on Sch C. They both make pretty good money. Can he max-fund either a SEP or a SIMPLE, and then both max out contributions to Roths?



Submitted by Alan - IRA critic on Fri, 2020-09-18 20:20

They both can make Roth contributions to the extent that their joint MAGI is not too high.



Submitted by Gregg Lynch on Sat, 2020-09-19 13:38

Thanks Alan, duly noted re the income limits for making the Roth contribution.  But assuming no limitation due to higher income, he could do both a SEP and a Roth, correct? 



Submitted by Alan - IRA critic on Sat, 2020-09-19 17:10

Yes, both a SEP contribution and a Roth contribution can be done.



Submitted by William Tuttle on Sun, 2020-09-20 11:10

  • A one-participant 401k provides the same exact employer contribution limit (25% of compensation) as a SEP IRA, plus an employee deferral.
  • A one-participant 401k has a higher employee deferral limit (2020 = $19.5k) vs. a SIMPLE IRA (2020 = $13.5K) and a higher employer contribution limit (25% vs. 3%).


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