UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next
Author: TicoHombre Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75623  
Subject: Re: Contribution Options no earned income Date: 7/11/2007 5:03 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
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.

--peter


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.

TH
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Post of the Day:
Value Hounds

Nu Skin Showing its Age?
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement