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Thank you Criser and Badger for your input! That clarifies something that has been bugging me for months.

Criser, you mentioned that tax deferred contributions have to come from earned income. I've just set up a "Simple IRA" for myself and my staff where I'll match dollar for dollar up to 3% of eligible employees income. If I understand this plan correctly, each employee may also tax defer up to $6k of their own income, so, for example, an employee whose gross income is $50k can contribute $6k, the employer can contribute $1500 for a total of $7500 tax-deferred.
If that is correct, and I think it is, can the individual ALSO contribute $2000 to a PERSONAL IRA?

Another question is in regards to my wife. She is on my Board of Directors as V.P. of my S-Corp. In truth, she does very little in the day-to-day operations of the business because she works full time for a local YMCA. Can I put her on my companies payroll and pay her a yearly salary of $6000 (contribute 100% to the SIMPLE IRA) plus 3% AND have her contribute $2000 to her Personal IRA AND have her make the maximum contributions to her employer sponsored plans?

In other words:

Her personal IRA = $2000
Her Simple IRA = $6180
Her contribution to her employer sponsored plans is maxed out at 13% of her income of $35k = $4550, and her employer matches 12% of her income = $4200.

Total tax deffered income to her would therefor be $16930. Is this legal?

Best regards,

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