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Message
SEP-IRA - How much Income is needed to max out?
Posted on 12/27/12 at 9:43 pm
Posted on 12/27/12 at 9:43 pm
I am looking for a quick opinion from tax savvy MT posters before conferring with my CPA.
So, if I have a small business (S Corp) and I pay myself and spouse as the only employees of the business, how much income do I need to pay us each to max out on the $50,000 (2012) SEP-IRA plan? Is it simply $200,000 each? Or do I need to include the $50,000 SEP-IRA payment in my gross income? The language is a little squirrely for my taste as is all things IRS. Any competent help on this subject is appreciated.
So, if I have a small business (S Corp) and I pay myself and spouse as the only employees of the business, how much income do I need to pay us each to max out on the $50,000 (2012) SEP-IRA plan? Is it simply $200,000 each? Or do I need to include the $50,000 SEP-IRA payment in my gross income? The language is a little squirrely for my taste as is all things IRS. Any competent help on this subject is appreciated.
3
Posted on 12/28/12 at 6:01 am to ynlvr
$200,000.
I think you are reading about the calculation for self employed taxpayers, which you are not.
I think you are reading about the calculation for self employed taxpayers, which you are not.
Posted on 12/28/12 at 9:42 am to tigeryat
Thanks tigeryat
Posted on 12/28/12 at 11:37 am to ynlvr
May want to consider a Simple instead.
Posted on 12/28/12 at 12:36 pm to Broke
Don't Simples max out at $11,500? SEP-IRA allows me up to $50,000. The catch-up provision is larger with the Simple but still doesn't nearly catch me up to the $50k the way I understand the two vehicles.
Posted on 12/28/12 at 2:13 pm to ynlvr
quote:
Don't Simples max out at $11,500? SEP-IRA allows me up to $50,000.
Correct.
Posted on 1/1/13 at 4:58 pm to ynlvr
get a solo 401k and it is easier to max.
You get 17K as an "employer contribution"
then up to 25% of "net profits" up to an additional 33K'
so total is 50k, but this works better if you come up short of max money because you get 17 k off the top then 25% of any profits.
Fidelity explains it better
You get 17K as an "employer contribution"
then up to 25% of "net profits" up to an additional 33K'
so total is 50k, but this works better if you come up short of max money because you get 17 k off the top then 25% of any profits.
Fidelity explains it better
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