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Author: gbaker One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75384  
Subject: 401(k) & Roth IRA & SEP-IRA Date: 11/5/1998 10:49 PM
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I've maxed out my 401k for this year offered through my employer. I also maxed out my new Roth IRA and I converted my traditional IRA to a Roth Conversion IRA.

Occasionally, I have self-employment income from doing contract work on the side and contribute a small percentage to an SEP-IRA. Is it OK to contribute to all those types of retirement accounts in the same year (401k, Roth IRA, SEP-IRA)? Other than the legal limits permitted in each is there a lower limit if you contribute to all three?

Thanks.
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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6521 of 75384
Subject: Re: 401(k) & Roth IRA & SEP-IRA Date: 11/9/1998 3:01 PM
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Greetings, Gbaker, and welcome. You asked:

<<I've maxed out my 401k for this year offered through my employer. I also maxed out my new Roth IRA and I converted my traditional IRA to a Roth Conversion IRA.

Occasionally, I have self-employment income from doing contract work on the side and contribute a small percentage to an SEP-IRA. Is it OK to contribute to all those types of retirement accounts in the same year (401k, Roth IRA, SEP-IRA)? Other than the legal limits permitted in each is there a lower limit if you contribute to all three?>>


Yes, you may contribute to all three vehicles up to the limits allowed by each. You have no lower limit to worry about in this instance.

Regards….Pixy


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Author: dswartz Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6527 of 75384
Subject: Re: 401(k) & Roth IRA & SEP-IRA Date: 11/9/1998 3:23 PM
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Pixy, something doesn't sound right. I thought that if you had a 401K plus (say) a SEP, you couldn't put any more into the SEP than would put you over the limit for the 401K. e.g. the limit for that is a cumulative one?



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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6540 of 75384
Subject: Re: 401(k) & Roth IRA & SEP-IRA Date: 11/9/1998 6:56 PM
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Dswartz asks:

<<Pixy, something doesn't sound right. I thought that if you had a 401K plus (say) a SEP, you couldn't put any more into the SEP than would put you over the limit for the 401K. e.g. the limit for that is a cumulative one?>>

The combination of the 401k and the SEP only limits the max contribution to the SEP so it can't exceed the lesser of 15% of net self-employed income or $14K. The absolute dollar amount for a SEP is $24K, but the unrelated employer 401k gets $10K of that. I didn't mention the upper limit on the SEP because it was only a small amount of income the writer was receiving from contract work.

The 401k is a CODA as is a SIMPLE. Contributions to those cannot exceed a combined $10K limit. We aren't talking a SIMPLE in this query. I think that's what got you confused.

Regards....Pixy

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Author: nonqual One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6648 of 75384
Subject: Re: 401(k) & Roth IRA & SEP-IRA Date: 11/17/1998 8:21 PM
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"The 401k is a CODA as is a SIMPLE. Contributions to those cannot exceed a combined $10K limit. We aren't talking a SIMPLE in this query."

Pixie:

Would you mind double checking? Block's training manual on retrurns for retired people states the combined limit ($10,000 for 1998)on elective deferrals applies to all of the following:

Section 401(k) or the Federal Thrift Savings Plan
Tax-sheltered annuity plans (section 403 (b))
Salary reduction SEPs (section 408(k)(6))
Section 457 (b) plans
Section 501(c)(18)(D) plans and
SIMPLE plans

Thanx





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Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6652 of 75384
Subject: Re: 401(k) & Roth IRA & SEP-IRA Date: 11/17/1998 9:36 PM
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Nonqual asks:

<<Would you mind double checking? Block's training manual on retrurns for retired people states the combined limit ($10,000 for 1998)on elective deferrals applies to all of the following:

Section 401(k) or the Federal Thrift Savings Plan
Tax-sheltered annuity plans (section 403 (b))
Salary reduction SEPs (section 408(k)(6)) (emphasis added)
Section 457 (b) plans
Section 501(c)(18)(D) plans and
SIMPLE plans>>


That's absolutely true. But be aware that a SARSEP is not a SEP-IRA. See my discussion of SEPs in my Foolish Retirement Plan Primer at http://www.fool.com/Retirement/Retirement.htm .

Regards….Pixy


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