Can an officer of S corp with no salary deduct a Sep IRA (based on the profits?)

Forum|Forum|6 years ago
December 7, 2019
1 reply
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Lacerte Tax

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Best answer by abctax55

Nope...Retirement plan contributions are based on *earned* income (SE income or W-2 income, or alimony).

And be sure you discuss with your client the repercussions of failure to take a reasonable salary from the S-Corp (ass-u-ming this officer provided services to the Corp as opposed to being a silent owner).

abctax55Answer

Level 15

Nope...Retirement plan contributions are based on *earned* income (SE income or W-2 income, or alimony).

And be sure you discuss with your client the repercussions of failure to take a reasonable salary from the S-Corp (ass-u-ming this officer provided services to the Corp as opposed to being a silent owner).

HumanKind... Be Both

C

cowboys15Author

Level 3

For 2019, he will be taking a salary. So, can he contribute 25% of his salary PLUS 25% of earnings from the Corporation? Example, salary $100,000, Profit from Corp $20,000., Sep amount $30000 ($120K x 25%)
Is this correct?

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