Bringing this thread back from the dead.
"More than one plan. If you contribute to a defined contribution plan (defined in chapter 4), annual additions to an account are limited to the lesser of $41,000 or 100% of the participant's compensation. When you figure this limit, you must add your contributions to all defined contribution plans. Because a SEP is considered a defined contribution plan for this limit, your contributions to a SEP must be added to your contributions to other defined contribution plans."
"If an employee is a participant in any other employer plan during the year and has elective salary reductions or deferred compensation under those plans, the salary reduction contributions under a SIMPLE IRA plan also are elective deferrals that count toward the overall annual limit ($13,000 for 2004) on exclusion of salary reduction contributions and other elective deferrals."
Notice that a SEP is more beneficial for those with another plan at their day job. This, I believe, is because a SEP is a profit-sharing plan rather then an elective deferral plan. In a SEP, the employer makes the contributions - in a SIMPLE, the employee makes the contributions.
*Usual disclaimer: I'm no CPA, tax attorney, blahblah. Don't believe everything you read on the net.