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  • 1.  401K and Employer's contribution

    Platinum Most Valuable Member
    Posted 01-25-2024 01:43 PM

    A fellow practitioner asked about the following scenario:  A person has a one woman corporation there is a 401K retirement plan. He contributes $22,500 to the plan, the corporation contributes $43,500 for a total of $66,000.  The person makes $100,000 in wages. It is an S Corp.

    The question that has come up is as follows: Can the company just contribute $66,000 and the employee make no contribution?



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    Michael Rubinstein
    CPA
    Michael D. Rubinstein CPA, PC
    North Bellmore NY
    516-900-1429
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  • 2.  RE: 401K and Employer's contribution

    Silver Most Valuable Member
    Posted 01-26-2024 07:01 AM

    Solo K includes 2 components.  #1 is employee deferral portion up to $22,500 in 2023 if under 50 and #2 is employer portion up to $43,500.    The employer can't make the entire $66,000 contribution.

    Also, in your example, there was $100,000 of wages.  In that situation, the employee can put away the $22,500 maximum but the employer can only put away $25,000 which is 25% of $100,000 wages.  Not sure how you could get to $66,000 under any scenario, with this type of plan.
    --
    Larry Prosky CPA
    Prosky & Rosenfeld LLP CPAs
    1025 Old Country Road
    Suite 403 W
    Westbury, NY 11590
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    e-mail: larry@prcpallp.com


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    Original Message


  • 3.  RE: 401K and Employer's contribution

    Platinum Most Valuable Member
    Posted 01-29-2024 09:20 AM

    Thanks.  I was using the wages that the other CPA gave me.



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    Michael Rubinstein
    CPA
    Michael D. Rubinstein CPA, PC
    North Bellmore NY
    516-900-1429
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    Original Message


  • 4.  RE: 401K and Employer's contribution

    Platinum Most Valuable Member
    Posted 01-29-2024 09:21 AM

    And I agree with you.  



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    Michael Rubinstein
    CPA
    Michael D. Rubinstein CPA, PC
    North Bellmore NY
    516-900-1429
    ------------------------------

    Original Message


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The opinions expressed are the views of the author alone and should not be attributed to any other individual or entity and shall not constitute an accounting opinion.