Can an owner/employee of SCorp make max pretax 401K contribution and 25% SEP contribution for the salary

Forum|Forum|5 years ago
April 13, 2021
4 replies
26 views

Can an owner/employee of SCorp use max 401-k pre-tax contribution and 25% of salary for SEP contribution

ProSeries Professional

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sjrcpa

Level 15

Their overall limit is 25% of compensation. But an over 50 contribution doesn't count toward the limit.

The more I know the more I don’t know.

E

ea_rva aka acctgtaxmatters

Level 5

Hi SGRCPA,

"Their overall limit is 25% of compensation. But an over 50 contribution doesn't count toward the limit."

So, for example, does this mean that if an SCorp owner's SEP for 2021 is $32,000 ($128,000 x 25%) and they are > 50 yrs old they can contribute up to $6,500 more?

rbynaker

Level 13

Are there two different employers? i.e. S-Corp has SEP and "regular" unrelated W-2 job has 401(k)?

I don't have a cite handy but I didn't think an employer could have both a SEP and a 401(k).

qbteachmt

Level 15

@ea_rva aka acctgtaxmatters

Started their own new topic, here:

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/s-corp-sep-contribution-limits-when-50-yrs-old-related-box-1-w2/00/206525

No need to keep diving into it in both places. And especially, this topic is from last year, and a new topic will get current info. Retirement plans and tables are a moving target and change every year, even without the new bills that were passed that affect 2021.

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