Guest bmurphy Posted March 20, 2002 Report Share Posted March 20, 2002 Hello, Can somebody explain how the owner of an LLC who does not draw W-2 wages participate in a SIMPLE? Is it based on net self-employment earnings similar to what a sole prop can do. Also since there is no "salary" is there a requirement for any type of written documenation similar to a salary reduction agreement. Thank You. Brian Link to comment Share on other sites More sharing options...
Gary Lesser Posted March 22, 2002 Report Share Posted March 22, 2002 It is based on net earnings from self-employment (NESE) which is defined in Code Section 1402(a). See any SIMPLE document. Generally, NESE is 92.35 percent of their net profits from self-employment. Thus, the elective and the match/nonelective may not exceed an owner's NESE. Link to comment Share on other sites More sharing options...
Guest bmurphy Posted March 22, 2002 Report Share Posted March 22, 2002 Gary, Thank you - since the LLC owner does not draw a "salary" what written documentation (if any) is required for them to make elective contributions? Brian Link to comment Share on other sites More sharing options...
Gary Lesser Posted March 22, 2002 Report Share Posted March 22, 2002 A standard election form will do specifying a "percentage" of their compensation and/or "100% of compensation up to $____." Once the amount is determined it can be contributed. Compensation in realit meaning their "earned income." Link to comment Share on other sites More sharing options...
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