Expert: Allen - 2/23/2010

Question
Hi,

I am a w2 employee and maximized my profit-sharing retirement plan with my employer. My wife is self-employed and has her individual 401k. I just start a side business with some 1099misc income. Can I start a individual 401k like my wife's.  

Thanks a lot in advance.

Answer
You can establish a profit sharing plan or a SEP for the side business. The contribution can be as much as approximately 18-19% of the net income from the business.

You can not double up on the 401k contribution. There is one maximum ($16,500 if you were born in 1961 or later and $22,000 if you were botn before 1961). So if you are contributing the maximum to the company plan, you can't contribute anything to your own plan.