SIMPLE IRA – contributions paid by employee
My client and his wife are the sole shareholders, sole employees in a S Corp. They are paid wages but nothing is withheld for the simple IRA contributions. His CPA instead has him writing a personal check monthly to his and his wife’s SIMPLE IRA. Is this legal … paying directly with no withholding?
Many Thanks as always … Mary
Permalink Submitted by Martin Helmer on Thu, 2014-04-24 00:20
See IRC 408(p).See IRC 402(g) definition of elective deferral.See R.P. 2013-12; section 6-11 or so. Itspeaks of SIMPLE Plans having an ‘operational defect,’just like a 401(a) plan. The most common of these is ‘not following the terms of the written plan.’If this is the first year they’ve used this contribution method and if the corporate return is on extension, someone might consider setting up a SEP for 2013.