Discussion:LLC Member contribution to Simple IRA
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| Revision as of 01:33, 5 October 2009 KathiJud (Talk | contribs) ← Previous diff |
Revision as of 13:26, 5 October 2009 Seaside CPA (Talk | contribs) (I think the only) Next diff → |
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| Yes it sounds like you'd have to do the 1065's before the Jan. 31st deadline to calculate and deposit the member/partner's employee contribution. You'd have until April 15th to deposit all employer matching contributions if you didn't have an extension. For employees with payroll, deposits of employee contributions have to be made within 30 days of the payroll period. | Yes it sounds like you'd have to do the 1065's before the Jan. 31st deadline to calculate and deposit the member/partner's employee contribution. You'd have until April 15th to deposit all employer matching contributions if you didn't have an extension. For employees with payroll, deposits of employee contributions have to be made within 30 days of the payroll period. | ||
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| + | {{ForumReplyPost|UserID=Seaside CPA|Date=5 October 2009|Text=I think the only time you would need to prepare the 1065 by Jan. 30 would be if the partner's net self employment income was going to be less than the maximum Simple contribution limit (for 2009, $11,500 if under 50, $14,000 if 50 or over). As long as net self employment income is over the limit, then partners know maximum amount they can contribute by Jan 30.}} | ||
Revision as of 13:26, 5 October 2009
Discussion Forum Index --> Advanced Tax Questions --> LLC Member contribution to Simple IRA
Discussion Forum Index --> Tax Questions --> LLC Member contribution to Simple IRA
| 4 October 2009 | |
I have a husband/wife that have two LLC's. They want to set up a simple IRA plan for their employees. Their investment man told them that they also would have to participate as employees so that the discrimination rules would not be violated. Is this correct? If they do participate then wouldn't their contributions would be based on thier respective K-1's and a contribution would need to be made by Jan 31 (their LLC's are filed on calendar based 1065 forms)? Not deductible but on thier 1040 above AGI, no limits on income correct?
The employer match would also be based on their earned income but would be deductible on thier LLC's 1065 form. Which would all need to be done before January 31? So would figure the employee contribution, which would show as a member draw then figure the employer contribution and take as a deduction on LLC to come down to earned income. Am I stateing this correctly. Master Tax Guide does not line this out. Several questions in this statement, any help would be greatly appreciated. Kansas CPA | |
| 4 October 2009 | |
| I don't believe there is any discrimination testing for Simple IRA's as far as choosing to participate or not. That is one of their best features. You can set one of these up for your employees and if they choose not to contribute their own amounts you have no responsibility to do an employer match for them. You cannot discriminate in the percentage employer match you choose to use. Simple 401(k)'s may be a different animal but I've never worked with one of those. I have several clients using the Simple IRA's but only in S Corp's where there are W-2's.
Your problem for those LLC owners is coming up with the eligible SE income for the year (net of the 50% of SE tax deduction) to calculate contributions & match by a certain date for sure. I'd have to look that date up. My S Corp's deposit contributions and matching amounts every payday so never a problem for me. | |
RoyDaleOne (talk|edits) said: | 4 October 2009 |
| http://www.google.com/search?hl=en&source=hp&q=simple+ira+rules&aq=f&oq=&aqi=g10
http://www.irs.gov/retirement/sponsor/article/0,,id=139831,00.html | |
| 4 October 2009 | |
| Appreciate the input, but are members considered eligible employees that matching contributions have to be made and the issue of the date to make the members contributions I am still thinking is January 31, so both LLC tax returns have to be done before then to competently figure their contributions, this sounds like a nightmare. | |
Seaside CPA (talk|edits) said: | 4 October 2009 |
| Matching contributions are due by the due date (including extensions) for filing your tax return. Publication 560 may help! | |
| 5 October 2009 | |
| http://www.irs.gov/retirement/article/0,,id=137830,00.html
Yes the LLC members with SE income are eligible to participate. From the info you gave they are fiing a partnership return so see the referenced page for info related to partners. This page also discusses when contributions have to be funded. Yes it sounds like you'd have to do the 1065's before the Jan. 31st deadline to calculate and deposit the member/partner's employee contribution. You'd have until April 15th to deposit all employer matching contributions if you didn't have an extension. For employees with payroll, deposits of employee contributions have to be made within 30 days of the payroll period. | |
Seaside CPA (talk|edits) said: | 5 October 2009 |
| I think the only time you would need to prepare the 1065 by Jan. 30 would be if the partner's net self employment income was going to be less than the maximum Simple contribution limit (for 2009, $11,500 if under 50, $14,000 if 50 or over). As long as net self employment income is over the limit, then partners know maximum amount they can contribute by Jan 30. | |
