IRA for work and my business
Yes, you can have both.  You'll need business income to contribute to a SEP IRA though.
Didn't see it mentioned so far, but depending on modified AGI you may be prevented from a tax deduction for your contribution to a Traditional IRA if you or your spouse are offered a retirement plan at work, even if you don't participate in it.  See the IRS page here for the details of deduction limitability: https://www.irs.gov/retirement-plans/2017-ira-deduction-limits-effect-of-modified-agi-on-deduction-if-you-are-covered-by-a-retirement-plan-at-work In my opinion, because I heavily favor all the benefits of the Roth, I'd contribute first to a Roth IRA and then to the Roth 401(k).   The former first because it puts the money in a place where you have more control over fees and how it is invested.   The latter because the contribution limits are much higher than the IRA, and the money grows tax-free and incurs no taxes on withdrawal. "From the way you frame the question it sounds like you more or less know the answer already. Yes - you can make a non-deductable contribution to a traditional IRA and convert it to a Roth IRA. Here is Wikipedia's explanation: Regardless of income but subject to contribution limits, contributions can be made to a Traditional IRA and then converted to a Roth IRA.[10] This allows for ""backdoor"" contributions where individuals are able to avoid the income limitations of the Roth IRA. There is no limit to the frequency with which conversions can occur, so this process can be repeated indefinitely. One major caveat to the entire ""backdoor"" Roth IRA contribution process, however, is that it only works for people who do not have any pre-tax contributed money in IRA accounts at the time of the ""backdoor"" conversion to Roth; conversions made when other IRA money exists are subject to pro-rata calculations and may lead to tax liabilities on the part of the converter. [9] Do note the caveat in the second paragraph. This article explains it more thoroughly: The IRS does not allow converters to specify which dollars are being converted as they can with shares of stock being sold; for the purposes of determining taxes on conversions the IRS considers a person’s non-Roth IRA money to be a single, co-mingled sum. Hence, if a person has any funds in any non-Roth IRA accounts, it is impossible to contribute to a Traditional IRA and then “convert that account” to a Roth IRA as suggested by various pundits and the Wikipedia piece referenced above – conversions must be performed on a pro-rata basis of all IRA money, not on specific dollars or accounts. Say you have $20k of pre-tax assets in a traditional IRA, and make a non-deductable contribution of $5k. The account is now 80% pre-tax assets and 20% post-tax assets, so if you move $5k into a Roth IRA, $4k of it would be taxed in the conversion. The traditional IRA would be left with $16k of pre-tax assets and $4k of post-tax assets." "I am not 100% sure, but I think the answer is this:  You can't max out both.  You could theoretically max out the SIMPLE IRA ($11,500) and then contribute $4,000 to your 401k, but your total can't exceed the 401k limit of $16,500.  This also means you could max out your 401k at $16,500, but you couldn't contribute anything to the SIMPLE IRA.  Note that no matter what, you can't contribute more than $11,500 to your SIMPLE IRA. (Note that this is all independent from your Traditional or Roth IRA, which are subject to their own limits, and not affected by your participation in employer-sponsored plans.) As I understand it, a 401k and a SIMPLE IRA both fall under the umbrella of ""employer-sponsored plans"".  Just like you can't max out two 401k's at two different employers, you can't do it with the 401k and the SIMPLE IRA.  The only weird thing is the contribution limit differences between SIMPLE IRA and 401k, but I don't think the IRS could/would penalize you for working two jobs (enforcing the lower SIMPLE IRA limit for all employer-sponsored retirement accounts). You should probably run the numbers, factoring in the employer match, and figure out which account-contribution scenario makes the most financial sense for you.  However, I'm not sure how the employer match helps you when you're talking about a small business that you own/run.  You may also want to look at how the employer match of the SIMPLE IRA affects the taxes your business pays. Disclaimer #1:  I couldn't find a definitive answer on your specific scenario at irs.gov.  I pieced the above info from a few different ""SIMPLE IRA info"" sites.  That's why I'm not 100% sure.  It seems intuitively correct to me, though.  Does your small business have an accountant?  Maybe you should talk to him/her. Disclaimer #2:  The $ amounts listed above are based on the IRS 2010 limits." Plain and simple, go into business.  I was in the exact same boat as you 5 years ago. Was going to school to become a Pharmacist while working in a Dominick's pharmacy as a tech. Absolutely hated it and did not see myself standing behind that counter for the rest of my life. Not to mention that a pharmacists job will be one of the firsts in the medical field to be automated.   Left pharmacy school to start my business degree. Got a couple of sales jobs for the experience while completing my bachelors. Now I'm working in Chicago as a commercial real estate broker. The plan is to work in this for the foreseeable future, and then parlay this career into my own business ventures and real estate investing and build from there! Yes, if you can split your income up over multiple years it will be to your advantage over earning it all in one year.  The reasons are as you mentioned, you get to apply multiple deductions/credits/exemptions to the same income. Rather than just 1 standard deduction, you get to deduct 2 standard deductions, you can double the max saved in an IRA, you benefit more from any non-refundable credits etc. This is partly due to the fact that when you are filing your taxes in Year 1, you can't include anything from Year 2 since it hasn't happened yet. It doesn't make sense for the Government to take into account actions that may or may not happen when calculating your tax bill. There are factors where other year profit/loss can affect your tax liability, however as far as I know these are limited to businesses. Look into Loss Carry Forwarded/Back if you want to know more. Regarding the '30% simple rate', I think you are confusing something that is simple to say with something that is simple to implement.  Are we going to go change the rules on people who expected their mortgage deduction to continue? There are few ways I can think of that are more sure to cause home prices to plummet than to eliminate the Mortgage Interest Deduction. What about removing Student Loan Interest? Under a 30% 'simple' rate, what tools would the government use to encourage trade in specific areas? Will state income tax deduction also be removed? This is going to punish those in a state with a high income tax more than those in states without income tax. Those are all just 'common' deductions that affect a lot of people, you could easily say 'no' to all of them and just piss off a bunch of people, but what about selling stock though? I paid $100 for the stock and I sold it for $120, do I need to pay $36 tax on that because it is a 'simple' 30% tax rate or are we allowing the cost of goods sold deduction (it's called something else I believe when talking about stocks but it's the same idea?) What about if I travel for work to tutor individuals, can I deduct my mileage expenses? Do I need to pay 30% income tax on my earnings and principal from a Roth IRA? A lot of people have contributed to a Roth with the understanding that withdrawals will be tax free, changing those rules are punishing people for using vehicles intentionally created by the government. Are we going to go around and dismantle all non-profits that subsist entirely on tax-deductible donations? Do I need to pay taxes on the employer's cost of my health insurance? What about 401k's and IRA's? Being true to a 'simple' 30% tax will eliminate all 'benefits' from every job as you would need to pay taxes on the value of the benefits. I should mention that this isn't exactly too crazy, there was a relatively recent IRS publication about businesses needing to withhold taxes from their employees for the cost of company supplied food but I don't know if it was ultimately accepted. At the end of the day, the concept of simplifying the tax law isn't without merit, but realize that the complexities of tax law are there due to the complexities of life. The vast majority of tax laws were written for a reason other than to benefit special interests, and for that reason they cannot easily be ignored. Yes, I have done this and did not feel a change in cash flow - but I didn't do it a the age of 23.  I did it at a time when it was comfortable to do so.  I should have done it sooner and I strongly encourage you to do so.   Another consideration:  Is your companies program a good one?  if it is not among the best at providing good funds with low fees then you should consider only putting 6% into your employer account to get the match.  Above that dollar amount start your own ROTH IRA at the brokerage of your choice and invest the rest there.  The fee difference can be considerable amounting to theoretically much higher returns over a long time period. If you choose to do the max , You would not want to max out before the end of the year.  Calculate your deferral very carefully to make sure you at least put in 6% deferral on every paycheck to the end of the year.  Otherwise you may miss out on your company match.  It is wise to consider a ROTH but it is extremely tough to know if it will be good for you or not.  It all depends on what kind of taxes (payroll, VAT, etc) you pay now and what you will pay in the future.  On the other hand the potential for tax-free capital accumulation is very nice so it seems you should trend toward Roth. "IRAs have huge tax-advantages. You'll pay taxes when you liquidate gold and silver. While volatile, ""the stock market has never produced a loss during any rolling 15-year period (1926-2009)"" [PDF]. This is perhaps the most convincing article for retirement accounts over at I Will Teach You To Be Rich. An IRA is just a container for your money and you may invest the money however you like (cash, stocks, funds, etc). A typical investment is the purchase of stocks, bonds, and/or funds containing either or both. Stocks may pay dividends and bonds pay yields. Transactions of these things trigger capital gains (or losses). This happens if you sell or if the fund manager sells pieces of the fund to buy something in its place (i.e. transactions happen without your decision and high turnover can result in huge capital gains). In a taxable account you will pay taxes on dividends and capital gains. In an IRA you don't ever pay taxes on dividends and capital gains. Over the life of the IRA (30+ years) this can be a huge ton of savings. A traditional IRA is funded with pre-tax money and you only pay tax on the withdrawal. Therefore you get more money upfront to invest and more money compounds into greater amounts faster. A Roth IRA you fund with after-tax dollars, but your withdrawals are tax free. Traditional versus Roth comparison calculator. Here are a bunch more IRA and 401k calculators. Take a look at the IRA tax savings for various amounts compared to the same money in a taxable account. Compounding over time will make you rich and there's your reason for starting young. Increases in the value of gold and silver will never touch compounded gains. So tax savings are a huge reason to stash your money in an IRA. You trade liquidity (having to wait until age 59.5) for a heck of a lot more money. Though isn't it nice to be assured that you will have money when you retire? If you aren't going to earn it then, you'll have to earn it now. If you are going to earn it now, you may as well put it in a place that earns you even more. A traditional IRA has penalties for withdrawing before retirement age. With a Roth you can withdraw the principal at anytime without penalty as long as the account has been open 5 years. A traditional IRA requires you take out a certain amount once you reach retirement. A Roth doesn't, which means you can leave money in the account to grow even more. A Roth can be passed on to a spouse after death, and after the spouse's death onto another beneficiary. more on IRA Required Minimum Distributions." This is a purely numerical statement that you should be able to check (and you CPA friend should be able to prove, if true).  The general advice, I think, is that you should not use your retirement funds this way, but general advice does not apply equally well to everyone.   You didn't give enough information for us to compute the answer, so you're on your own there.  If you do this (or have the CPA do it), make sure that it accounts for all pluses and minuses that you'll have.  On the minus side, you get any direct penalties in addition to potential loss of right to contribute for a period of time, so make sure you consider both aspects, especially to any degree that you would lose an employer contribution or match.  Also consider the fact that the money already in is tax advantaged, and you won't be able to replace that amount later.  So there will be a compounding effect to what was lost. (This may or may not be balanced by a mortgage interest deduction down the road - My guess is that it will not, but, again, the details of your situation may dictate a different path.  The mortgage interest deduction decreases each year as you pay more principal whereas the compounding from being tax deferred tends to increase each year.)