ea_rva aka acctgtaxmatters

Level 5

Question

S-Corp SEP Contribution Limits when > 50 yrs old & related Box 1 W2 Wages

Forum|Forum|4 years ago
March 6, 2022
1 reply
15 views

Hi,

In a prior post I came across:

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

My question: 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 the SCorp can contribute up to $6,500 more?

Also if SEP contribution is for SCORP owner with no employees, please confirm that contribution is not considered deferred compensation in Box 1 of W2 but rather expense item on 1120S.

ProSeries Professional

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Level 15

There's no over 50 catch up contribution in a SEP. (Unless it is a pre1997 SARSEP with employee deferrals)

The S Corp can deduct the SEP contribution as pension expense.

The only W-2 effect is to check the retirement plan box.

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

ea_rva aka acctgtaxmattersAuthor

Level 5

My apologies if I've started two posts on this. Wasn't sure the first one went through.

In response to question:

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).

Answer: In my case only SCorp with SEP for taxpayer, no other employer.

Level 15

The other post.

https://proconnect.intuit.com/community/proseries-tax-discussions/discussion/can-an-owner-employee-of-scorp-make-max-pretax-401k-contribution/00/155931

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