SARSEP maximum limit
Hi,
An owner of a small business S-Corp is the company’s sole “employee.” He also has an old SARSEP plan which he still contributes to. He is over 50. The maximum contribution rate for 2015 is $53,000 for employer contributions and $24,000 for salary deferral contributions. The company is extremely profitable and he also draws a high salary so the 25% of income limit doesn’t apply.
Can his company contribute $53,000 and he as an employee also defer another $24,000 of salary into the SARSEP i.e. $77,000? Or is there an overall limit on the sum of both contributions that caps the $77,000 to a lesser amount?
Thanks!
Permalink Submitted by Alan - IRA critic on Sun, 2015-02-08 18:12
Being over 50, the 53k annual additions limit becomes 59k, and the 24k is part of that limit. Therefore, the total max amount is 59l
Permalink Submitted by chris erickson on Thu, 2015-02-12 17:42
Thanks! However, if he just had a SEP and is over 50 years old, even though the annual additions limit is $59K, the max contribution to a SEP still would be $53K, right? So the only advantage in the SARSEP vs. SEP in this case is being able to tax-defer another $6K? Thanks again