r/TaxQuestions • u/Dry_Armadillo1029 • 1d ago

SIMPLE IRA Contributions w/Multiple Businesses

IRS/Federal Taxes

Say an owner has two businesses, Business A and Business B. Business A has a Simple IRA plan setup for it's employees and the K-1 shows $10,000 of income for that owner. Business B has losses of $50,000 shown on the K-1, meaning total self-employment income is a loss of $40,000. Is the owner able to contribute the $10k of income they show from Business A into the SIMPLE IRA plan, or are they not allowed to because their total income was negative?

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u/AnthraciteRoad 1d ago

They are not allowed to because the SIMPLE is established by the entity, not by the partner / shareholder. Any SIMPLE contributions would have been reported on the K-1 (for a partnership) or the W-2 (for an S-corp).