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Subject:  Re: 401(k) funding by corporation Date:  9/30/1998  6:30 PM
Author:  TMFPixy Number:  5753 of 88438

Greetings, Helter, and welcome. You asked:

I've already posted this on the self-employed fools board, but not received a response yet :), so I thought I'd try you guys: I'm about to start my own corporation(I'll be the only employee), I understand that I can start a 401(k) and it can take 30k per year. Also, the personal contribution is a maximum of 10k. Right now, My FICA taxes are calculated using my total salary including the 10k, can my corporation fund the full 30k without me contributing at all - and are contributions by a corporation into a 401k done with before or after corporate income tax dollars?

Also, the same before/after tax question for company pension plans. And who do I talk to - any ideas for creating one of them.

My company will have between 250 and 300k revenue per year(if things go as expected) and I'll be the only person working for it - I'd like to avoid as much taxation as possible. For reference - I'm only 26 - gotta love software!

Bob78164 suggested you seek the services of an attorney in setting up the corporation. To that I would add that you seek the services of a Certified Financial Planner skilled in retirement plans for small businesses to help you set up the right kinds of plans for you. Your income seems to justify it, but you're talking both defined benefit and defined contribution plans in your questions. You need to sit down with a skilled professional to discuss the various pros and cons of the vehicles available to you. There are several approaches that can be taken, and they have different results and costs.

Trust me…..It will be money well spent for what you're trying to do.


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