Simple IRA for self employed person

[Kimmyjack]

Just confirming.  I have not had this in a while.  A self employed person can contribute to a Simple IRA with catch up provision in the amount of $16,500 for 2021.  Are they also allowed to contribute 3% of their Schedule C earnings?

[qbteachmt]

This article covers it:

https://www.irs.gov/retirement-plans/simple-ira-tips-for-the-sole-proprietor

You are asking about the 3% that is "employer" match.

[Kimmyjack]

The thing I wanted to confirm is that the $16,500(which includes catch up) is not the maximum that can be deducted on the tax return. You can take the $16,500 plus the 3% matching?

What is confusing me is that there is an employer contribution mentioned(the 3%), but the employer is the sole proprietor contributing the $16,500.

[qbteachmt]

Follow that link, read that article, especially follow the math at the part for, "Your total plan contribution is $5,200."

[Kimmyjack]

Got it.  I wish they would give an example of someone who maxes it out.  That would make it much clearer, in my opinion.

[qbteachmt]

Did you search the web? I used google:

sole proprietorship simple ira

and got...

https://www.hurdlr.com/deductions/simple-ira-tax-limits

"However, unlike a traditional IRA, the contribution and deduction limit for a SIMPLE IRA is higher, generally $14,000 (in 2022), plus an additional employer contribution."

...

"Lombardi is a 45-year-old sole proprietor real estate agent who has been in business for four years. During the year he earned $95,000 of commission income from his sole proprietorship and reported $87,373 ($95,000 x 92.35%) on line 4 of his Schedule SE. Lombardi chose to make the maximum elective deferral of $14,000 plus an employer match of 3% of his compensation, or $2,621 ($87,373 x 3%) into his SIMPLE IRA. When he prepares his taxes, he would deduct $16,621 (elective deferral plus employer match) on line 28 of his Form 1040."

[Kimmyjack]

Perfect.  I did search google, but didnt find that.  Thank you.