Advanced Underwriting Consultants

Question of the Day – August 16

Ask the Experts!

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?

Answer: Yes.

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.

Have a question for the professionals at AUC?  Feel welcome to submit it by email.  We may post your question and the answer as the question of the day.