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If a taxpayer contributes to a Simple IRA through his W-2…

If a taxpayer contributes to...
If a taxpayer contributes to a Simple IRA through his W-2 employer, can he also contribute to that same Simple IRA as a shareholder in that 1120S corporation as a self-employed individual because of the K-1 form he receives?If he can't, what happens if they already did?
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3/28/2018
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
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The taxpayer is able to contribute through the W2 withholding and the employer may match that contribution or make a non elective contribution, but a contribution other than one of those two options is not allowed.

Please see below a direct excerpt from the IRS.Gov

"Eligible employee's may make a salary reduction contribution, (which the taxpayer did) and the employer must make either a:

  • matching contribution or
  • nonelective contribution

No other contributions may be made under a SIMPLE IRA plan

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Please let me know if this has answered your question or if you have any additional questions.

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Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,631
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Customer reply replied 3 months ago
I'm not sure if it is a Simple IRA. It is coded "F" on the w-2 which states elective deferrals under a section 408(k)(6) salary reduction SEP. However, the Form 5498 IRA contribution statement states plan type as "Simple" and the contributions listed under "Simple contributions". Could they possibly have it coded wrong? I'm thinking they probably prepare their own W-2 forms
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