Discussion:SIMPLE for S shareholders
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Discussion Forum Index --> Tax Questions --> SIMPLE for S shareholders
| 15 April 2007 | |
| My client has 3 S corporations. He set up SIMPLE for all the S corp's. My question is can he take $10,000 per corporation for a total of $30,000 from his W2's or is he limited to only 1 SIMPLE per taxpayer regardless of how many S's he has? | |
| 15 April 2007 | |
| All of his S corporations must be aggregated for SIMPLE purposes. This means that his elective deferrals are limited to $10,000, not $30,000. | |
| 15 April 2007 | |
| How to fix this problem as my client has deducted $20,000 (not $30 as stated above)? | |
| 15 April 2007 | |
| I disagree, limit would be the 401K limit of 15,000,(20,000 if over 50) between all three companies, i.e. 10k in one company and 5k in another company. How to fix it. Get on the phone Monday morning with company money is invested with. Have them disburse and possibly put back in as 2007 contribution. You will have to amend all S corps effected as well as amend w-2's. Good luck. | |
| 15 April 2007 | |
| I found the following from the IRS website:
An employee may participate in a SIMPLE IRA plan even if he or she also participates in a plan of a different employer for the same year. However, the employee's salary reduction contributions are subject to the limitations of section 402(g), which provides an aggregate limit on the exclusion for elective deferrals for any individual. I checked 402(g) and it said the limit is $15,000. So I think Mastill said is correct regarding the limit. | |
| 15 April 2007 | |
| Each corp can have its own SIMPLE.
So long as the individual employee doesn't exceed the aggregate total for deferral, provided sufficient each W-2 gross supports the contribution, it doesn't matter which corporation and how much is contributed to each SIMPLE. | |
| 15 April 2007 | |
| Yes, the elective deferral limit is $15,000 under 402(g); however, we are not talking about the 402(g) limit. Instead, we are taling about the 408(p)(2)(E) limit.
If the S corporations are all owned by the same shareholder, only one $10,000 elective deferral limit is available to an employee employed by the controlled group. See Sec. 414(b) and Sec. 414(c). | |
