Solved

401(k) and Sep-IRA

Forum|Forum|2 years ago
January 8, 2024
2 replies
0 views

If I am the sole employee and shareholder of a Sub S and I have another job where I max out my 401K, can my subS still contribute to a SEP-IRA which benefits me?

Best answer by dmertz

Yes, your S corp can contribute to a SEP plan established under your S corp as long as you do not have an ownership or controlling interest in the company sponsoring the 401(k) that would make the two companies a controlled group and would require the two companies to be treated as a single employer for the purpose of a retirement plan. SEP contributions are employer contributions and the limits on employer contributions are not affected by participation in the plan of another employer.

For 2023, the maximum SEP contribution would be 25% of the wages reported on your W-2 or $66,000, whichever is less.

dmertzAnswer

Yes, your S corp can contribute to a SEP plan established under your S corp as long as you do not have an ownership or controlling interest in the company sponsoring the 401(k) that would make the two companies a controlled group and would require the two companies to be treated as a single employer for the purpose of a retirement plan. SEP contributions are employer contributions and the limits on employer contributions are not affected by participation in the plan of another employer.

For 2023, the maximum SEP contribution would be 25% of the wages reported on your W-2 or $66,000, whichever is less.