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re: Best small business retirement account contribution rate for President/ owners?
Posted on 1/5/24 at 4:21 pm to UpstairsComputer
Posted on 1/5/24 at 4:21 pm to UpstairsComputer
Employer contributions are 25% of pre tax pay though right?
I should have just made the numbers easy. Lets say I pay myself $100k W-2 and $100k distributions. This seems more than reasonable from everyone I've talked to as far as the IRS goes.
Previously with my SEP I could do $50k (that's 25% of $200k). Now that I have an employee lets say I do a 10% match with SimpleIRA or 401k I'm only at $33,000 ($23k + $10k (10%)) total.
That's a damn significant chunk missing?
I should have just made the numbers easy. Lets say I pay myself $100k W-2 and $100k distributions. This seems more than reasonable from everyone I've talked to as far as the IRS goes.
Previously with my SEP I could do $50k (that's 25% of $200k). Now that I have an employee lets say I do a 10% match with SimpleIRA or 401k I'm only at $33,000 ($23k + $10k (10%)) total.
That's a damn significant chunk missing?
2
Posted on 1/5/24 at 8:54 pm to baldona
quote:
Employer contributions are 25% of pre tax pay though right?
Yes, you (the business) want to deduct them.
I had a SEP back in the day and my tax lady said it was only of the W-2
I do know the SIMPLE match is only 3%. There's some other silly rule I've never seen anyone use not worth explaining, but it's lower.
Yeah, you got the math right. Other option is to fire everybody that makes it to three years.
Posted on 1/6/24 at 11:48 am to baldona
quote:
Previously with my SEP I could do $50k (that's 25% of $200k)
You can’t make a SEP contribution based on the owner distributions. It can only be based on net earnings from self employment as defined in Publication 560 Chapter 1.
This post was edited on 1/6/24 at 12:11 pm
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