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|Subject: S-Type Corp Retirement Plans||Date: 12/16/2004 2:48 PM|
|Author: Hear2Stay||Number: 10887 of 14985|
I am the sole employee of an S-Type Corporation. I am the majority shareholder (90%) and there is only one other shareholder (10%).
Right now, I personally have a Roth-IRA, but I would like to also set up a retirement plan with the corporation for myself.
Since I have an S-Type Corporation, I pay myself a low salary ($24k/year currently, but will probably raise it a bit soon) to avoid paying Social Security and Medicare taxes as much as I can (FYI I'm only 21 years old).
These are the retirement plans I know of and what I know about them:
- No percentage, which is good for low salaries, up to $9k ($10K in 2005 and more for both for individuals over 50).
- 15% of salary up to $40k.
- 25% of salary up to $40k.
- Simplified paperwork in comparison to regular 401(k)
- The "one person" refers to companies where only the owners or owners' spouses are employees.
- You can borrow fom the account (not that I ever would).
The 401(k) looks attractive, but even if I started to pay myself $40k/year (which I would rather not when the corporation earns under $100k/year and I can easily convince the IRS that I don't deserve a large salary -- it's an internet based business that makes all of it's money off of an automated advertising system) I still would only be able to contribute $10k.
For a low salary the SIMPLE-IRA looks like a good plan, but am I missing any other options? This is all very new to me.
Does anyone have any recommendations or books/places for further reading?
Once I feel knowledgable enough, I will be talking it over with an accountant.
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