SEP and Solo 401(k)

[southerndoc]

I was reading that the $49,000 employer contribution limit is per plan.

I have two separate businesses, neither of which is incorporated. I work as an independent contractor as an emergency physician and I also provide EMS medical direction.

If I have two separate tax ID's, can I establish a SEP-IRA for my medical direction business and a solo 401(k) for my primary work as an emergency physician? As of right now I only maintain a SEP for both businesses, but I was looking to maximize my deductions for 2013.

[PaddyMac]

If neither businesses are incorporated, are you filing your income as Schedule C, sole proprietor? If so, I think you need to treat yourself as one business for the sake of retirement savings. Otherwise, it would be all too easy to just ignore the limit (which is $50K in 2012 btw - see http://www.sepira.com/). I don't think the tax ID is enough. But check with your accountant - or better yet, the IRS.

[JamesSFO]

Either way, you will only be able to have maximum of one employee (EE) contribution of $17.5K for 2013. Potentially each employer (ER) can make matching contributions based on your salary to get closer to $51K for 2013. For the Solo/I401K plan of Employer 1, you could defer $17.5K and if you have sufficient salary 20-25% match as I recall, have the ER match $33.5K. For Employer 2, you cannot do further EE contributions, but you can have the ER match your salary...

Limits courtesy: http://benefitsattorney.com/modules.php?name=415

[JamesSFO]

BTW, this thread discussed the issues http://www.bogleheads.org/forum/viewtopic.php?f=1&t=105449

And I had confusion on multiple employer matches and starting about http://www.bogleheads.org/forum/viewtopic.php?f=1&t=105449#p1533127 there in the thread will get you the specific IRS citations.

[southerndoc]

BTW, this thread discussed the issues http://www.bogleheads.org/forum/viewtopic.php?f=1&t=105449

And I had confusion on multiple employer matches and starting about http://www.bogleheads.org/forum/viewtopic.php?f=1&t=105449#p1533127 there in the thread will get you the specific IRS citations.

Thanks for the link. I did see that when I searched, but the original poster is an employee for a company that maintains a 401(k). I'm speaking of ability to do this as a sole proprietor that isn't incorporated. Must I incorporate in order to do this?

[JamesSFO]

Likely yes, because the $51K limit for 2013 is per employer. The other way to go is a defined benefit plan where you could defer up to $205K in 2013 based on a planned income.

[PaddyMac]

I would def. check with a CPA before going to the trouble of incorporating. It could be that as the sole owner you would still be limited. It just seems like such a simple loophole for a sole proprietor millionaire... But please report back to this thread when you find out!