Discussion:Solo 401(k) treatment..need help
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Revision as of 20:37, 13 April 2006
Discussion Forum Index --> Tax Questions --> Solo 401(k) treatment..need help
| 13 April 2006 | |
| I have a real estate agent for a client. He is set up as an LLC and taxed as a sole proprietor. Recently, he opened a solo 401(k). I need to figure out what his contributions ( EE and ER) should be AND what the tax effect of these contributions will be.
So... assumptions: 2006: LLC Net income (before taking any wages) : $115,000 ER contribution : max. limit of $15,000 (per IRC 402(g)) EE contribution - my understand is this can be a max. of 25% of wages. If this is the case, wouldn't you want to make one large payroll check right before year-end and contribute the maximum (assuming he can live without that cash)? In this situation, $115k x 25% = $28,750 ER contribution. Are these ER contributions subject to FICA? Do wages have to be paid or can this be based on the net income of the sole proprietor? Any advice is highly appreciated. | |
