SEP-IRA - How much Income is needed to max out? | TigerDroppings.com
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ynlvr
LSU Fan
Baton Rouge
Member since Feb 2009
1043 posts

SEP-IRA - How much Income is needed to max out?

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.


tigeryat
LSU Fan
God's Country
Member since Oct 2005
2577 posts

re: SEP-IRA - How much Income is needed to max out?
$200,000.

I think you are reading about the calculation for self employed taxpayers, which you are not.


ynlvr
LSU Fan
Baton Rouge
Member since Feb 2009
1043 posts

re: SEP-IRA - How much Income is needed to max out?
Thanks tigeryat


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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
58082 posts

re: SEP-IRA - How much Income is needed to max out?
May want to consider a Simple instead.


ynlvr
LSU Fan
Baton Rouge
Member since Feb 2009
1043 posts

re: SEP-IRA - How much Income is needed to max out?
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.


tigeryat
LSU Fan
God's Country
Member since Oct 2005
2577 posts

re: SEP-IRA - How much Income is needed to max out?
quote:

Don't Simples max out at $11,500? SEP-IRA allows me up to $50,000.


Correct.


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makersmark1
Auburn Fan
Member since Oct 2011
2218 posts

re: SEP-IRA - How much Income is needed to max out?
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


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