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My wife and I have an LLC consulting company. we started…

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My wife and I...

My wife and I have an LLC consulting company. we started using ADP for our 401 k plan this year. we also started using w-2 for our income. we did not have ADP take any retirement contributions out for 2017. we thought we could take it our as we paid our taxes.

Accountant's Assistant: The Accountant will know how to help. Is there anything else important you think the Accountant should know?

Can you work with me tonight on this as I want to call ADP very soon. this is complicated.

Submitted: 3 months ago.Category: Tax
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3/25/2018
Tax Professional: Lev, Tax Advisor replied 3 months ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 33,122
Experience: Taxes, Immigration, Labor Relations
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Can you verify - how that LLC consulting company is classified for federal tax purposes?
Is that a partnership? or S-corporation or C-corporation ?

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Customer reply replied 3 months ago
We are an llc chapter S. We get a w-2 for income and will get a k-1 for any residual gains. My question is under our 401 k plan can we take out retirement amountd for this year (2017) and what are the limits?
Tax Professional: Lev, Tax Advisor replied 3 months ago

Contributions into 401k plan are from two sources

- employee elective deferrals - that are withheld from wages - it is too late make such contribution

- employer's matching contributions - that are due by the due date of the tax return of S-corporation - so if you filed an extension request - you still have time to make that part of 401k contribution.

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Customer reply replied 3 months ago
Can you call me?
Tax Professional: Lev, Tax Advisor replied 3 months ago

I will be glad to schedule a phone call - seems as your order did not come though..

Please try again.

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Customer reply replied 3 months ago
what are the limits on the amount we can take out for retirement. some % of profit? your system is not taking my new card number.
Customer reply replied 3 months ago
can I give you the card info over the phone
Tax Professional: Lev, Tax Advisor replied 3 months ago

what are the limits on the amount we can take out for retirement. some % of profit?

employer's matching contribution is max - 25% of your wages - from w2 box 1.

.

Sorry experts are not able to handle payments - you will need to contact customer service.

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Customer reply replied 3 months ago
can we take the 25% out of the K-1 amount for this past year? in years past we did not have a w-2. we only had a K-1. what 401-k rules apply to this situation?
Tax Professional: Lev, Tax Advisor replied 3 months ago

can we take the 25% out of the K-1 amount for this past year?

amount reported on K1 is your investment income and not compensation.,

We may not consider that amount for 401k contribution.

Sorry.

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Customer reply replied 3 months ago
How do owners of llcs contribute to pensions if they do not have w-2s. I saw somewhere today that some accountants think that llc owners should not have wages and hence w-2s. Our k-1 accountant has a line in our K-1 saying that our earnings include 32.5 k for pension contributions for both my wife and I as owners
Tax Professional: Lev, Tax Advisor replied 3 months ago

LLC owners must have self-employment income - and if yes - they will be eligible for retirement plan contributions.

If that is a single member LLC - it is disregarded form income tax purposes.

So all income is passed to the member - and reported on schedule C.

In this case - retirement plan contributions are based on net self-employment income.

If that is an LLC with several members - - and NO election made to treat it as a corporation

- such LLC is classified as a partnership.

The partnership issue L1 to each partner - reporting his/her share of income - and if that income is subject to self-employment tax.

If yes - that self-employment income allows to make retirement plan contributions.

For S-corporation - wages reported on W2 are subject to employment taxes - and allows retirement plan contribution, but K1 income is NOT subject to neither self-employment nor employment taxes. That amount is considered as investment income and not as compensation.

So K1 issued by S-corporation is not considered for retirement plan contribution.

Your phone call request still did not come through...

Let me know if you will be able to clear your payment and we may talk tomorrow.

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Tax Professional: Lev, Tax Advisor replied 3 months ago

I appreciate if you take a moment to rate the answer.

Experts are ONLY credited when answers are rated positively.

If you still have any doubts, need clarification - please be sure to ask.

I am here to help you with all Social Security / Tax related issues.

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