How to calculate SEP IRA contributions for an S Corporation
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- Опубликовано: 3 авг 2024
- How to calculate SEP IRA contributions for an S Corporation. In this video I'm focusing on the SEP IRA for the s corp small business owner.
The SEP IRA contribution calculation for small business owners who own an s corp is different than a self employed schedule C filer.
The calculation is based on the income, rate and limit. Employees do not contribute to a SEP IRA.
0:00 | Introduction
0:50 | 6 SEP IRA Tips
0:56 | 6. No Roth IRA
1:23 | 5. SEP IRA Investment Options
1:51 | SEP IRA Retirement Age
2:11 | SEP IRA Employer Funded Only
2:30 | SEP IRA Filing Deadline
3:03 | SEP IRA Eligibility
3:54 | SEP IRA Contribution Limit
4:08 | SEP IRA Income Limit
7:05 | S Corp W2 Vs Distributions
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CERTIFIED FINANCIAL PLANNER™
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Best video on a corp sep ira on the Internet
Very well done! Thank you.
Thank you Travis
Do you have a single SEP-IRA's or multiple SEP-IRA's if multiple contributors?
1. Would my employed (W2) and self employed (sole prop) SEP-IRA contributions go in to a single SEP-IRA, or would I be required to have two SEP-IRAs?
2. Is there any problems with taking a SEP contribution for my sole prop income and S-Corp W2 income?
3. Would I keep two Form 5305-SEP's for my records?
My Sole prop income was in Q1 only. This sole prop then became a SM-LLC (S-corp election) and was my income for the rest of the year.
Do you have to set up an all-new Sep-IRA account for the S-Corp shareholder or can the S-Corp fund an existing Sep-IRA account?
Great explanation! Question: Is there a contribution limitation for SEP IRA if an independent contractor (w/1099 form), fill joint tax return with his/her spouse? say, household AGI for both is over $230K of traditional IRA limit?
No limit on earnings but the calculation for 2019 will only use up to 280k for the calculation. But that’s for w2 not agi.
Travis Sickle Thank you for the quick reply! Great financial planning channel !
Do you use a whiteboard video application? I would love to know which one because the handwriting is flawless. Great video.
Thanks! I use a light board with a piece of paper over it. I also have an overhead camera.
If am a llc s corp. I have a traditional ira, do I have to set up a sep ira to make employer contributions? Or can I make employee contributions to my traditional ira
Does the net income of the S-Corp count towards the earned income calculation or is it strictly W-2 income?
Strictly W-2, because the distributions are technically not considered earned income. So while you save on SE tax, you can't contribute it to a workplace plan.
Great Article Travis... Consider this scenario: S-Corp, sole owner, 200K earning. Don't pay W2, straight K1. Can I contribute 50K to SEP such that net I receive is 150K. How do I calculate if I am not paying myself on W2?
Sounds like you may be doing your taxes wrong.
@@TravisSickle Wrong... Can you point out the wrong, please?
I believe you need to be paying yourself via W-2 as an S corp
@@skwerl81 yep!
Contribution is using W2 box 1 (wages, tips, and other compensation) amount * max 25% = Sep IRA contribution?
Is this correct?
I'd think so unless Box 1 included Health Insurance Premiums for 2% or above owners.
@@zoomnfinancial - I can't find any information on this topic anywhere... So, if an S Corporation 2% owner includes their health insurance premiums as part of their income/compensation in Box 1 of Form W-2, can you take 25% of Box 1 or can you only take 25% of their income/compensation in Box 3 and Box 5 - which excludes their health insurance premiums? TIA
Do you have to open a new sep Ira account under the s corp name in order to contribute or can you just contribute to your sep Ira under your personal name funded by the S corp? Thanks I asked cause I have just changed my business from sole proprietorship to S corporate
The brokerage firm don't even ask for the entity name while opening. I assume it don't matter.
Did you ever find the answer to this? I think Henry is right based on the research I've done, I don't think it matters but still not feeling 100% sure about it
@@skwerl81 it does feel weird because of the simplicity.
@@henrymui4239 yup basically lol!
So I called up TD Ameritrade and they said nope, you can use the same Sept ira you have existing. However for scorp you have to fund your contribution from your scorp business account. Additional form is required for each employee of the scorp, and that employee has to open a Sep ira with an additional form signed by scorp owner that he/she will fund that employee ira account from
The business funds.
Am I obligated to contribute the same percentage to my employee ? Is that a must?
yes
Your video sounded like the owner of the scorp (also as employee) is obligated to make the same percentage of owner’s contribution amount of sep ira to the additional employee of the scorp. Say for example, if my husband paid me, and he contributed 10% of his w2 income to sep ira, he has and must contribute 10% of my income to my own sep ira! Is this correct? Or can he make the contribution without making mine (ie his employee)?
Employees must be included in the SEP plan if they have: attained age 21; worked for your business in at least 3 of the last 5 years; received at least $650 in 2021 and 2022; $600 in compensation (in 2016 - 2020) from your business for the year.
Are there any other employees aside from you?
Can we have this for a partnership, plz? 🙏
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Thank you ❤️
Link to SE SEP info?