Contributions for 2% Owner of Sub S Corporation for SIMPLE
Here is scenario: (A) 2% or greater Sub-S Corporation stockholder
(B)Sub-S Corporation pays the health insurance for the stockholder
(C) IRS requires that the cost of the health insurance be added back to the W-2 for federal and state wages but not for Fica or Medicare
The health insurance premiums paid by the company for the stockholder included in box 1 of the W-2, is this amount included in the calculation of the employers matching simple IRA contribution. Is the health insurance considered wages for the employer matching Simple IRA calculation?
Permalink Submitted by BruceM on Sun, 2008-07-20 05:52
I’ll assume the >2% sharehold is an employee with a salary…
are you sure that the pass through benefit included in the W2 block one is not subject to FICA tax…that is, it was not included in block’s 3 or 5?
If not (like deferred comp), it will generally not be eligible to be included in the earned income subject to FICA tax that is available, up to the covered compensation limit, for contribution to one’s retirement plan or IRA, whether by the EE as salary deferral or the ER as a non-elective match. Interestingly, the employer match in a SIMPLE is not subject to the covered compensation limit.
BruceM