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  • S Corporation Contributions

    George Blower replied 1 year, 11 months ago 2 Members · 2 Posts
  • 1 Reply
  • Mitch P.

    Top SubjectSolo 401k Contributions,Mega Backdoor Roth Solo 401k
    Top ForumsSolo 401k Contributions, Mega Backdoor Roth Solo 401k

    Mitch P.

    Mitch P.

    Top SubjectSolo 401k Contributions,Mega Backdoor Roth Solo 401k

    August 9, 2022 at 9:11 pm

    If I am paid $100K from my S Corp. I know I can defer around $19,500 to employEE pretax contributions to a Solo 401K that is already setup. For past years, my S Corp income was high, so I contributed $25K of the $100K to my Solo 401K as an additional employER contribution (25% of W2 wages). Also, did the same for my wife who is an employee with me. Halfway through 2022 I am realizing that if I continue to do this, I may have a loss on my 1120S tax return. I have enough in Retained Earnings (and the business bank accounts) that I can pay this out still from the corporation. But is this within the guidelines? Can my S Corp pay out its 2 employees 25% of their W2 income each, even though this may cause a loss to the corporation?

    Mitch P.
  • George Blower

    Top SubjectDaily Live Webinar,Solo 401k
    Top ForumsDaily Live Webinar, Solo 401k

    George Blower

    George Blower

    Top SubjectDaily Live Webinar,Solo 401k

    August 12, 2022 at 3:22 am

    Thank you for your good post!

    In short: yes. This confirms that for a solo 401k owner whose business is taxed as an S-corporation, the ability to make Solo 401k contributions is based on such solo 401k owner’s w-2 wages from the S-corp (along with other factors such as age, etc.) without regard to whether such S-corporation is profitable, etc.

    Please see more: https://www.mysolo401k.net/solo-401k/solo-401k-contribution-limits-and-types/

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