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Bill
Bill, Enrolled Agent
Category: Tax
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Experience:  EA, CEBS - 35 years experience providing financial advice
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Hello - background I have an S-Corp in which I am the ...

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Hello - background: I have an S-Corp in which I am the only employee. I paid myself 60K last year (07) and had an XXXXX XXXXX Owner K retirement plan (essentially a self-employed 401K) With it, I was able to put away $15K in company matched profit sharing (25% of 60K) and $15.5K in employee differed salary. In total, 30.5K tax differed retirement savings. Question: This year, I worked six months actively in my S-Corp - and have no plans to dissolve the S-Corp. For this year (08), I''ll pay myself 30K in salary. In July, I started (W2) with a different company (call it X) that offers a Coporate 401K plan. Can I still contribute 15.5K to X''s company 401K (the 08 limit) and also contibute the maximums to my own companies Self-Employed 401K? At 30K salary, I think the maximums would be 15.5K personal differed savings as well as the 25% company profit sharing match at 7.5K (25% of 30K)?   Thus, my total 401 tax differed retirement savings for 08 would be 7.5K + 15.5K +15.5K = 38.5K
Submitted: 8 years ago.
Category: Tax
Expert:  Bill replied 8 years ago.

The total amount that you could contribute to both plans combined as elective deferrals is $15,500. IRC section 402(g) limits the amount that can be deferred to all plans to $15,500 (if under age 50). So if you defer $15,500 to your S Corp then you could not make any deferrals to X company's plan or vice versa. If you defer $5,500 to your S Corp then you could defer $10,000 to X company's plan.

http://www.irs.gov/retirement/participant/article/0,,id=151786,00.html

 

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Customer: replied 8 years ago.
Hi Bill - so in addition to the $15,500 maximum differal (regardless of pecentage split between my own S-Corp and Company X) as well as the Company Profit Sharing at $7.5K (25% of 30K salary from my S-corp)?
Expert:  Bill replied 8 years ago.
Yes, you can contribute the $7,500 for your S Corp employer contribution in addition to the $15,500 total elective deferral contribution (regardless of the split). If you are eligible for a match at X Company the $15,500 deferral there would be more beneficial.