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SEP IRA Question

Forum|Forum|4 years ago
May 10, 2022
3 replies
17 views

Hello, I have a client amending his 1120-S because he forgot to account for a SEP IRA contribution that he made during the year. On ProConnect, do I enter the SEP IRA contribution on the 1120 S under: Ordinary Income -> Deductions -> Pensions, profit-sharing plans?

Do I also need to account for this in any other locations for his individual tax return?

Thank you!

ProConnect Tax

This topic has been closed for replies.

Best answer by IRonMaN

Ok so your comments perhaps changes a few things things. The owner of the S-Corp is also the only employee and he did not set up any payroll (though he should have). With that said, can he still take the deduction for the SEP IRA contribution?

Nope

sjrcpa

Level 15

1. Yes

2. No

The more I know the more I don’t know.

joshuabarksatlcs

Level 9

@sjrcpa I'm still learning.

But let me put a 5-paragraph asterisk on

2. No.

SEP IRA would imply wages were paid.

Therefore, a W-2 was (or W-2's were) issued to the employee(s).

On the W-2(s), was the "Retirement Plan" box checked?

If NOT, it'd be an error.

If the error(s) existed, did the employee(s) make IRA contribution(s)?

If the employee(s) did, did it go beyond the income limitation?

** Answer asterisked in case Bob was behind the (trick) question.

I come here for kudos and IRonMaN's jokes.

sjrcpa

Level 15

Good points @joshuabarksatlcs

The more I know the more I don’t know.

George4Tacks

Level 15

@CUSO It does appear your client is subject to a 6% penalty for excess contributions.

https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps should get you pointed in the right direction to help them possibly amend their 1040 and work on correcting these contributions.

Answers are easy. Questions are hard!

JRC

Level 7

There seems to be a communication problem between you and your client.. I complained to one of my clients for their lack of communication with me regarding tax and accounting issues and did threaten to fire them over it. Having to do with a SEP contribution he made on his own prior to Setting it up within the Corporation.

Payroll is a must for any S-corporation shareholder.

C

CUSOAuthor

Level 4

This is a new client, all of this work was done by a previous firm, I am just trying to get the client back on track now.

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