I am a S-Corp sole owner. Pre-covid I paid myself an annual salary of $96k, and contributed $24k to my SEP-IRA. Last year, I could only afford to pay myself $36k annual salary, and contribute only $9k. This year, I’ve paid myself ytd $65,100 which would allow me to contribute $16,275 to my SEP-IRA.

If I pay myself an additional $30,900 for 2021 to reach my $96k annual salary and allow me to contribute the full $24k to my SEP-IRA, this will cost me $5,300.40 in employee payroll taxes and $2,363.90 in employer payroll taxes = $7,664.30. Does it make sense to pay ~$8k, so I can increase my SEP-IRA contribution by $7,725? Doesn’t seem to me like the amount I’ll save now by deferring the income taxes until I’m retired makes up for the amount I need to pay in additional employee/employer payroll taxes. I’m not a financial expert, not even close, so any feedback here is greatly appreciated.

IF I don’t pay myself anything additional for 2021 in the form of a salary, I still have access to that money in the form of a corporate disbursement which I only pay income tax on – no employee/employer payroll taxes. So, then the next question is: IF it doesn’t make sense to pay myself any additional salary to increase my SEP-IRA contribution, is there something else I can do with ~$8k that would be a smarter choice in terms of return and still taking into consideration that I’ll need to pay income tax on that money now and down the road on any earnings?

Thank you.