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Category: Finance
Satisfied Customers: 4676
Experience:  Tax professional and business consultant for 35 years.
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I have a small business with 4 full time employees. I also

Customer Question

I have a small business with 4 full time employees. I also have a full time job with benefits. I am able to contribute to both a 457b and 403b through my job (2 different positions with different Paychecks-one has a 4% match). I am looking to put more money away for retirement through the S-Corp. I do not want to do a cash balance plan and I have no low compensated employees (all of our admin work part time bc they are grad students and do not get close to 1000 hours a year). Which retirement plans would offer the highest limits for me to be able to contribute? would starting a 401k for the business be the best bet? I realize I would have to stop contributing to the 403b but if I could make contributions that are higher than the standard contributions as owner it might be worth it. I am willing to do a 3% match to employees. Is a profit sharing plan better? I couldn't afford to match 25% as everyone bc they make nearly as much as me in the s-Corp. Hope this all makes sense.
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: In summary, looking to maximize retirement contributions for my business that are above and beyond the retirement contributions I can already make through my job, put the most money I can away and provide benefit to my employees without going broke myself,
Submitted: 1 month ago.
Category: Finance
Customer: replied 1 month ago.
Would a new comparability method work best?
Expert:  PDtax replied 1 month ago.

Hi from Just Answer. I'mCustomer and can assist.

Expert:  PDtax replied 1 month ago.

Without knowing all the specifics, I can suggest an option that might work. A Simple IRA.

Contributions come from wages, so you can contribute more from your pay, $12,000 per year, without sizable contribution for any employees. They would have to agree to wage withholding.

You have to offer a match, 2% or 3%, but you will accomplish what you want with little cost. If the 12,000 contribution is more than you can put away elsewhere, this could be a winner.

There are age adjustments, such as a higher Max contribution if you are 50 or older. But this should give you what you are looking for.

Thanks for asking at just answer. Of course, you should review your specifics with a qualified tax pro. Positive feedback is appreciated after review. I'mCustomer

Customer: replied 1 month ago.
Sorry, should have clarified. I am looking to defer at least 50000.00
Expert:  PDtax replied 1 month ago.
Then you want a defined benefit plan. Contributions are based on your age and goal at retirement, and contributions actuarially determined.
Customer: replied 1 month ago.
Thanks. Then which one? That's my question. A profit sharing or a traditional 401k? Can I contribute more to than standard limits for a traditional 401k if I am the owner. If I can't then it seems like it would have to be a profit sharing plan, right?
Expert:  PDtax replied 1 month ago.

Neither. A defined benefit plan.

It is not a defined contribution plan, which is limited by percentages of wages. It is a plan that allowed you to meet a goal at retirement.

Customer: replied 1 month ago.
Oh, right. Like a cash balance plan. I really don't want to do that (see above) for lots of reasons. So if I am limited to a traditional 401k vs profit sharing plan, which one would offer me the highest limits? That's my question. Sorry if I haven't been clear.
Expert:  PDtax replied 1 month ago.

A traditional 401(k) would allow you to contribute 18,000 if you were under age 50, 24,000 if you are over 50. Since this must come from your wages, it has low additional cost to employers.

Any other plans would require you to contribute for all employees.

Positive feedback will be appreciated.

Expert:  PDtax replied 1 month ago.
Customeragain, following up on your retirement plan analysis.

Please advise if this met your needs, and rate my assistance to complete your request.