- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Best small business retirement account contribution rate for President/ owners?
Posted on 1/6/24 at 5:35 pm to slackster
Posted on 1/6/24 at 5:35 pm to slackster
quote:
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.
Sorry, poor terminology. My understanding is it’s 25% of net earnings. My point with the distributions is that would be included in the net earnings. Or a good indication there of.
What I’m trying to say, is that adding an employee of 3 years reduces an employed owners ability to contribute to their retirement unless major changes are made?
1
Posted on 1/6/24 at 5:51 pm to baldona
quote:
Sorry, poor terminology. My understanding is it’s 25% of net earnings. My point with the distributions is that would be included in the net earnings. Or a good indication there of.
No.
If you have $100k in owner distributions and $100k in wages, you cannot multiply 25% by $200k. The owner distribution isn’t in your net earnings.
Also, because you’re self employed, you can actually only contribute 20% of net earnings. The 25% number is true, but it’s a circular calculation for the business owner, so you have to add back the SEP deduction which results in a 20% SEP contribution.
I realize you may have been vague for illustrative purposes, but you may want to get another CPA if you’ve actually been doing this kind of stuff.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News