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Indiv 401k Contribution Tax Question

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aonfear
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Indiv 401k Contribution Tax Question  Reply with quote  

Hi All,

I think this is correct Forum for this question which has me stumped.

I have gross revenue from my Solo S-Corp of $156k total this year

The Maximum Indiv 401k contrib I can make is $49k in 2009 which consists of $16.5k standard plus 32.5k [=Max 25% of Salary of 130k ]

If i pay myself 130k this year then my California and Fed Taxes will be very high and my Corp will make a net loss for the year [Which will pass through to me as it is an S-Corp]

From the limited research I've done , it always says i should max my 401k [which i can afford to do, by injecting a little capital in to my company to cover the delta between salary and expenses and income]

Am i right to do this ?,


Appreciate any insights you guys can give me,

Rgds,

N
Post Fri Aug 28, 2009 5:11 pm
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coaster
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Location: Wisconsin
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It's the correct forum, but I'm not sure we have any members able to give a definitive answer on such a question. The usual tax questions we find here are personal income tax questions. The only thing I can come up with right off the top is to look into whether you can also set up one of the other tax-deferred plans, like a SEP for example, when you also have a 401(k). I presume the reason you have a 401(k) is because you have employees? That would factor into it. If you can't find an answer on the IRS web site, which is actually a pretty decent resource nowadays, you'll probably have to work with a tax professional.

One last thought......shifting income around in order to avoid taxes doesn't work too well any more. The loopholes have been mostly plugged. They'll get you somewhere. Laughing

~Tim~
Post Sat Aug 29, 2009 3:25 pm
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aonfear
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Cash: $ 1.10

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Joined: 10 Aug 2009
Location: California
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Thanks coaster,

Its actually an Individual 401k [ Called solo 401k sometimes) which allows you to depoasit up to 25% of W2 Earnings plus 16.5k 401k Contribution up to max $49k per year.

I'm essentially just trying to evaluate whats most tax beneficial

Rgds,

N
Post Sat Aug 29, 2009 5:30 pm
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coaster
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Thanks, and sorry we couldn't help, so far. I get a kick out of your signature line Very Happy

~Tim~
Post Mon Aug 31, 2009 4:12 am
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