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Contributing to Multiple Retirement Plans (SEP IRA & Solo 401k)
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3 Replies
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1. if one owner has two or three different companies with no employees, one company has a sep ira, another has a solo can we still use the $64500 for 50 and over for total contributions for 2021? what about two solos?
2. I am guessing if I contributed to a Sep IRA for one company in 2021, then I can not start a solo for the same company in the same year. please confirm?
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QUESTION:
1. if one owner has two or three different companies with no employees, one has a sep ira, another has a solo can we still use the $64500 for 50 and over for total contributions for 2021? what about two solos?
RESPONSE:
1) If the SEP-IRA was not established using Form 5305 (see discussion of Form 5305 in the Solo 401k vs SEP IRA comparison page) the contributions may be made to both but you would need to aggregate the contributions to determine whether you have met the contribution limits.
2) Likewise, if there are two Solo 401k plans that are owned by the same person or controlled group, the contributions would be aggregated for purposes of determining whether the limits have been met. Note: It is generally not wise to set up multiple Solo 401k plans for businesses that are owned by the same person (instead contributions can be aggregated for multiple sources of self-employment income).
QUESTION:
2. I am guessing if I contributed to a Sep IRAin 2021, then I can not start a solo in the same year. confirm?
RESPONSE:
If the SEP-IRA was not established using Form 5305 (see discussion of Form 5305 in the Solo 401k vs SEP IRA comparison page) the contributions may be made to both but you would need to aggregate the contributions to determine whether you have met the contribution limits.
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