SEP for an S-corp
Steve and Janet are the only employees of their S-corp. Steve wants to set up a SEP. Is there any problem in using a SEP with an S-corp? Assuming that there is not an issue, how would Steve code the contribution on his W-2 (box 12?)? Since the only employees are husband and wife, do they still need to be careful about funding SEP accounts for each of them proportionally?
Permalink Submitted by David Mertz on Mon, 2015-12-21 23:32
SEP-IRA contributions are not reported in an employee’s W-2. The SEP-IRA contributions for Steve and Janet must be in the same percentage of their respective incomes reported in box 1 of their W-2s (a maximum of 25%). The SEP-IRA contributions are a deduction reported on the S corp’s tax return (Form 1120S line 17).