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One potential solution, though. Is it possible for the S Corp to pay you a small salary? $8000 would be adequate to get you and your spouse an IRA contribution. (Or up to $10k if one or both of you are over 50.)

That will depend on how your S corp is working and what your agreements are with your business partners. As an aside, you might point out that officers of a corporation are, by definition, employees. The IRS would very much like to see all officers receive some kind of salary. When the S corp doesn't pay any salary at all to its officers, the IRS can argue that some (or all) of your distributions are instead salary. Then they tack on payroll taxes and withholding and charge you a boatload of penalties and interest.

If you're not really involved in the business, this may not actually be an issue. But it might be something to think about.


Hi, Peter and thanks for the suggestion. I am pretty well aware of the IRS's concerns on officers being compensated for time spent managing a corp. It's a line I try hard not to cross. It's a fairly easy one not to cross living in Costa Rica while the business is in Oklahoma. However, I do fear that the time spent consulting with the manager, etc could become an issue. I appreciate the reminder.

Your suggestion about a salary to the officers equal to the annual maximum contributions to an IRA is something I will look into more carefully. It looks like if I want an IRA, that will be my only real alternative. The more I researched, the more I began to suspect that might be the best alternative.

Thanks again for the response. That points me more clearly in a direction.

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