Defined Benefit Plan contributions
I have two clients (one is a sole & the other is an S Corp) w/ DB plans. They share the same CPA. Both contribute roughly 115k annually to the DB plans, of which approximately 90k in each plan is for the clients & their wives (the remaining 25k is for the ees). On the tax return the CPA is palcing the 90k on line 28 of the 1040 vs Line 19 of Schedule C for the sole & Line 17 of the 1120S for the Corp. Is this correct?
Permalink Submitted by mk foss on Mon, 2009-05-11 21:01
It sounds correct to me. The S corporation must pay salaries to owner-employees and take the retirement plan contribution on the Form 1120S. A sole proprietor can deduct retirement plan contributions made for employees on Schedule C but the deduction for the owner is made on page 1 of the return.
Permalink Submitted by [email protected] on Mon, 2009-05-11 21:52
so it sounds correct for the sole but for the S corp the pension contrib for the owners/ees should be on the 1120, not the 1040? Thanks in advance for your help.
Permalink Submitted by mk foss on Tue, 2009-05-12 00:33
Yes the S corp return (1120S) should have the retirement plan distribution for the S Corp. I thought that was indicated on the original post.