UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Next Thread
Author: nahogan Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75339  
Subject: SEP IRA for an S-Corp Date: 11/3/1998 9:53 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I am self-employed and set up as a S-Corp. I am the only employee.

Can I have a SEP IRA? If so, how much can I contribute...?

If not what are the alternatives?

Thanks in advance for the advice!

Print the post Back To Top
Author: dswartz Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6407 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/3/1998 10:11 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
> I am self-employed and set up as a S-Corp. I am the > only employee.

Good, makes things simpler.

> Can I have a SEP IRA? If so, how much can I
> contribute...?

Depends on how much you make. You can contribute up to 15% of your W2 income, up to a maximum of $24K or so.

> If not what are the alternatives?

For a 1-person S-Corp, IMO, there are no other alternatives that make sense. SIMPLE-IRA is more paperwork and has a lower limit. Anything else (Money Purchase and/or Profit Sharing) are more complicated to run (and have onerous IRS reporting requirements).



Print the post Back To Top
Author: ataloss Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6423 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/4/1998 3:46 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
It is hard to belive how easy the SEP IRA is to set up.

Print the post Back To Top
Author: nahogan Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6432 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/4/1998 8:59 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Thank you for the advice!

If I do set up a SEP IRA and contribute at least $2000, does this disqualify me from contributing to a Roth or standard IRA?

I am trying to duplicate the same benefit that an employee gets from being able to contribute to a company plan and an IRA.



Print the post Back To Top
Author: dswartz Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6433 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/4/1998 9:17 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0

<< If I do set up a SEP IRA and contribute at least $2000, does this disqualify me from contributing to a Roth or standard IRA?

I am trying to duplicate the same benefit that an employee gets from being able to contribute to a company plan and an IRA. >>

No, the SEP contributions are not counted against your individual contributions. (e.g. no more so than if you had a regular day job and were contributing to a qualified retirement plan there).




Print the post Back To Top
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6441 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/5/1998 2:02 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Greetings, Nahogan, and welcome.

<<I am self-employed and set up as a S-Corp. I am the only employee.

Can I have a SEP IRA? If so, how much can I contribute...?>>


Yes, you may have a SEP-IRA to which you may contribute up to 15% of your salary. The salary is capped at $160K this year, which means the maximum dollar contribution cannot exceed $24K. See IRS Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, Keogh) for details. You may download it at http://www.irs.ustreas.gov/prod/forms_pubs/index.html .

Regards…Pixy



Print the post Back To Top
Author: TMFPixy Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6453 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/5/1998 2:14 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
Nahogan asks:

<<If I do set up a SEP IRA and contribute at least $2000, does this disqualify me from contributing to a Roth or standard IRA?>>

No, it does not. You may contribute up to $2K per year to the Roth at the same time you make contributions to your SEP as long as you meet the Roth AGI limits (i.e., and AGI of $95K or less (single) or $150K or less (joint)).

Regards….Pixy



Print the post Back To Top
Author: Wyvern51 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6461 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/5/1998 10:14 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
<<If not what are the alternatives?>>

If you are incorporated, you can establish both a 401(k) plan and a money purchase pension play. You can put up to 15% in the 401(k) and 10% in the money purchase plan. This would allow you to defer up to 25% of your pay.

Your discount broker (e.g., Charles Schwab) can direct you to an organization that can provide you with approved prototype plans. We did this several years ago for our 2-person corporation. It will be a pain to to set these plans up, but the power of tax-deferred compounding of your retirement savings will make it worth while. The annual reporting to the IRS isn't too difficult after the first time.

Good luck,

Don




Print the post Back To Top
Author: dswartz Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 6463 of 75339
Subject: Re: SEP IRA for an S-Corp Date: 11/5/1998 10:54 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0

<< If you are incorporated, you can establish both a 401(k) plan and a money purchase pension play. You can put up to 15% in the 401(k) and 10% in the money purchase plan. This would allow you to defer up to 25% of your pay. >>

Why on Earth would a one person corp want a 401K??? This is the most expensive, rule-heavy plan there is (except for certain defined benefit plans). Some folks run paired money purchase and profit sharing plans (10% + 15%).



Print the post Back To Top
UnThreaded | Threaded | Whole Thread (9) | Ignore Thread Prev Thread | Next Thread
Advertisement