A:

If there is no relationship between the two companies - the only link is that the employee works for both of them - then the employee can make salary deferral contributions up to an aggregate amount of $20,500, with no more than $13,000 to one of the SIMPLE IRAs.

The maximum aggregate contribution for an individual who reaches age 50 by the end of the year is $20,500. SIMPLE IRAs are subject to limitations established under IRCĀ§ 402(g), which limits salary deferral contributions to $15,500 for 2007. Therefore, an individual who participates in multiple retirement plans can defer no more than $15,500 for 2007 (regardless of the number of plans in which he or she participates) plus catch-up contributions of $5,000.

On the other hand, if the two companies are affiliated or related in any way - if there is any one party that has ownership of both companies, whether in part or 100% ownership - or if there is any relationship that would constitute an affiliated service group, then the maximum amount that the individual can defer to both SIMPLEs may be limited to $13,000.

To learn more, check out the SIMPLE IRA tutorial.

This question was answered by Denise Appleby (Contact Denise)

RELATED FAQS
  1. When are Simple IRA contributions due?

    Depositing SIMPLE IRA deferred compensation, matching and non-elective contributions when they are due will avoid penalties ... Read Answer >>
  2. What are the differences between a Simple IRA and a Traditional IRA?

    SIMPLE and traditional IRAs are retirement savings vehicles that differ in their early distribution penalties and in who ... Read Answer >>
  3. What are the contribution limits on a Simple IRA?

    Learn the 2014 contribution limits for investing in a SIMPLE IRA, meant for businesses with 100 or fewer employees to help ... Read Answer >>
  4. Where can I find information on multiple annual additions for someone employed by ...

    That information can be found in Internal Revenue Code Section 402(g). Also see IRS Publication 571.If an individual participates ... Read Answer >>
  5. How do I report Simple IRA contributions on a W2?

    Learn how Savings Incentive Match for Employees, or SIMPLE IRA, contributions are reported for the participant on Form W2 ... Read Answer >>
  6. I have several jobs. Can I contribute the maximum to multiple employer retirement ...

    It depends. A question such as this requires detailed information in order to provide a helpful response. Here is a general ... Read Answer >>
Related Articles
  1. Retirement

    SIMPLE IRA Contribution Limits in 2016

    Learn the SIMPLE IRA contribution limits for 2016, with a brief summary of how the plan works, including eligibility and contribution and distribution rules.
  2. Retirement

    SIMPLE IRAs: Conclusion

    By Denise Appleby Savings incentive match plan for employees (SIMPLE) is an IRA-based employer plan under which eligible employees are allowed to make contributions to their SIMPLE IRAs, and ...
  3. Retirement

    SIMPLE IRAs: Introduction

    By Denise Appleby What Is a Savings Incentive Match Plan for Employees (SIMPLE) IRA?A SIMPLE IRA is a retirement plan that may be established by employers, including self-employed individuals ...
  4. Professionals

    SIMPLE plans

    SIMPLE plans
  5. Professionals

    Other Employer-Sponsored Plans

    Other Employer-Sponsored Plans. Other Employer-Sponsored Plans: Simplified Employee Pension (SEP) IRA, Savings Incentive Match Plans for Employees (SIMPLE) and 457 Governmental Plans
  6. Retirement

    SIMPLE IRAs: Eligibility Requirements

    By Denise ApplebyWho May Establish a SIMPLE IRA? Any employer who meets the following requirements is eligible to establish a SIMPLE IRA plan: The employer employed 100 or fewer employees who ...
  7. Retirement

    SIMPLE IRAs: Contributions

    By Denise ApplebyEligible employees may make elective-deferral contributions to their SIMPLE IRAs and the employer may elect to make either matching or nonelective contributions. Employer contributions ...
  8. Retirement

    Traditional IRAs: Contributions

    By Denise ApplebyFunding an IRA A Traditional IRA can be funded by several sources and means: Regular IRA contributions Spousal IRA contributions Transfers Rollover contributions Regular IRA ...
  9. Retirement

    Retirement Planning For 20-Somethings: Saving Options

    For the most part, you will be responsible for adding amounts to your retirement nest egg. However, if you work for an employer that provides benefits under a retirement plan, you may be able ...
  10. Retirement

    401(k) Contribution Limits in 2016

    Find out what the contribution limits are for 401(k) retirement savings plans in 2016, including individual, employer and aggregate limits.
RELATED TERMS
  1. Savings Incentive Match Plan For Employees Of Small Employers - SIMPLE

    A retirement plan that may be established by employers, including ...
  2. SIMPLE IRA

    A retirement plan that can be used by most small businesses with ...
  3. IRA Plan

    A plan that individuals may establish to arrange and plan for ...
  4. Matching Contribution

    A type of contribution an employer chooses to make to his or ...
  5. Individual Retirement Account - IRA

    An investing tool used by individuals to earn and earmark funds ...
  6. Traditional IRA

    An individual retirement account (IRA) that allows individuals ...

You May Also Like

Trading Center