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Author: asarver Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76081  
Subject: Self-Employed SIMPLE Date: 2/5/2001 5:29 PM
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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!
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Author: W401K Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 27702 of 76081
Subject: Re: Self-Employed SIMPLE Date: 2/5/2001 10:34 PM
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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 that


Bill

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