Calc/Timing of SEP contrib
My husband pays himself a nominal W2 salary from our S Corp. He also receives W2 income from another employer. He contributes to a 401k with this other employer – but did not max it out for 2010. We would like to make SEP contributions. He has a traditional IRA account.
1> Can we make SEP contributions to the traditional IRA account prior to 4/18 and still count them towards 2010?
2> What amount can we contribute? Can he contribute/deduct 25% of his W2 income from the S Corp? Or is there some other calculation/worksheet we have to do as the sole owner of the company?
Thanks so much for any guidance!
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Joined: Mon Apr 11, 2011 3:50 pm
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Permalink Submitted by Alan Spross on Tue, 2011-04-12 03:36
1) Yes. Work with the IRA custodian to complete a SEP IRA adoption agreement for the IRA. Contributions can be made as late as the extended due date, but if not ready by 4/18 you should file for an extension do your return does not have to be amended.
2) 25% of his W-2 income from the S Corp but not to exceed 49,000.
Permalink Submitted by Jose Morales on Tue, 2011-04-12 15:59
To save the IRA custodian a little grief, even if you do make your SEP contribution for 2010 by 4/18, there is not “prior year” SEP coding and the contribution will not be on a 2010 5498 that comes out in May. SEP contributions are reported on a calendar year basis because of the extended due date for making your contribution, which is well beyond the due date for sending out 2010 5498s.