Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
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.
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
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.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! 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.