Believe it or not, it does sound right to me. With a Simple IRA, if you earn at least $7,000 in net moonlighting income as an independent contractor, you can contribute $7,000 into a Simple IRA for the year. The only catch is your combined contributions into your Simple IRA and 401(k)/403(b) accounts for the year can't exceed $11,000 (assumining you're under the age of 50). Contributions made on your behalf by your employer don't count towards the $11,000 maximum.




Keep in mind that the amount you can contribute is reduced by the expenses you claim against your self-employment income. For example, if you earn $7,000 as an independent contractor, and have $3,000 in professional expenses to claim against that income, you could only contribute about


$4,000 to your Simple.




For someone in your position, a Simple IRA is a great way for you to maximize your retirement plan contributions this year.

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Replying to:

I have $6600 in independent moonlighting income for 2002. I'm told by my investment company that I can contribute 100% of this into a simple IRA, as long as my Simple IRA + 401K contributions don't exceed $11,000 for the year, which they won't. I recently switched jobs and cannot contribute to my new company's 401K this year, but did contribute with my old job for the first 6 months of 2002. Does this sound right?

Zip Code: cpa@mdtaxes.com