Two Sources Of Income

Question 1

Under what can circumstances can someone with two jobs/income sources maintain two retirement plans and make the maximum contribute to each?

Answer 1

The two income sources must be from unrelated, separate sources (i.e. not under common control).

Question 2

Assuming one has two eligible sources of income each with an employer or self employed retire plan, what is the maximum allowable contribution across both plans?

Answer 2

Employer contribution - The maximum allowable employer contribution under IRS rules is allowable for both plans (up to $54,000 per plan, total $108,000).

Employee contribution - The maximum allowable employee contribution applies to the combined plans. Total employee contributions across both plans cannot exceed $18,000 ($24,000 if over 50). Employee contribution, if any, reduces the employer contribution dollar for dollar.

Question 3

How does the IRS define “self-employed”?

Answer 3

You are self employed if you generate income through any of the following business forms:

Sole proprietor
Independent contractor
Partnership

You are not “self employed” by this standard if you are incorporated.