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.
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.
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.
The other post.
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