Hello, to preface this question here is a quick bit of info. I have taken a small contracting job which will pay me around $6500 this year. I currently contribute to a 403(b) plan at my regular work as well as a ROTH IRA. I have read IRS Pub. 560 which describes SIMPLE IRAs and wasn't able to determine the answer to my question from that lovely document.Okay, since for the purposes of this contract I am self-employed I would like to open a SIMPLE IRA for myself, if possible contributing all of my earnings up to $6500 (the limit for 2001, pls correct me if I'm wrong). I know that with a SIMPLE IRA the employer is required to contribute to the plan as well. My question is, for self-employed people do you really need to distinguish between the employer contribution and your own? Can I just fill out the form 5304 to establish the IRA at Vanguard and then deposit my checks up to the contribution limit or do I have to somehow differentiate between them to show that half comes from the 'employer', i.e. myself. Also, since the employer matches the contributions can I actually contribute up to $13,000 (assuming I made that much from the contracting)?Thanks!
The match limit on a SIMPLE is 3% of pay. So if you make $6,500 the employer contribution would then be $195. Now, don't forget, that if you make $6,500, you won't be ble to defer the full amount. You will still have to pay FICA tax and Medicare and LT disability tax. Whats left after that is 100% eligible to go into the SIMPLE. I'm not sure if you can just send in a lump sum. My guess would be that there needs to be some record of each source of contribution. Employee & Employer.I would call Vanguard and ask how they handle thatBill
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