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URL:  https://boards.fool.com/basically-if-you-dont-pay-yourself-a-salary-you-22182990.aspx

Subject:  Re: S corp income? Date:  3/9/2005  7:45 PM
Author:  vrb747 Number:  77535 of 130422

Basically, if you dont pay yourself a salary, you cannot fund an IRA or 401K. I may be incorrect about this, so definitely consult a tax attorney.

If you do pay yourself a salary, you have to pay social security taxes (15.3%) by the end of the year.

A better way next time might be a SIMPLE IRA. You can contribute everything you pay yourself as a salary towards a SIMPLE IRA. Of course you will pay social security tax but the entire amount u contribute to the IRA will be tax deductible, so u will probably break even (assuming 15% tax bracket). For 2005 u can contribute 10,000, more if you are above 50. Plus the employer (in this case your s-corp) can tack on another 3%.

HTH.
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