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The professionals at Advanced Underwriting Consultants (AUC) answer the tax and technical questions posed by producers. Here’s the question of the day.
Question: My client is eligible to make a maximum contribution to his company-sponsored SIMPLE IRA. May he also make a maximum contribution to a traditional IRA?
The SIMPLE IRA is treated as a pension plan contribution, so it is subject to qualified plan contribution limits. The maximum elective employee contribution to a SIMPLE IRA in 2011 is $11,500 for those younger than 50, $14,000 for those 50 and older.
The taxpayer may also contribute to a traditional IRA in 2011—up to $5,000 if younger than 50, $6,000 if 50 or older.
The taxpayer’s participant in the SIMPLE IRA plan may prevent him from deducting his traditional IRA contribution, depending on his adjusted gross income.
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