No Name Posted March 31, 2005 Posted March 31, 2005 Hope this is a softball! Have a new client with a Solo 401(k) Plan. He deferred $16,000 before year end 2004. He's over 50. His net schedule came in at (round numbers) 15,000 and 1/2 SE tax is 1,000, so Plan Comp is $14,000. Am I correct in assuming that $2,000 (or $3,000 for that matter) can be classified as "catch-up" and therefor no excess contribution? Is the $16,000 deductible, or only the $14,000? Thanks all.
Blinky the 3-eyed Fish Posted March 31, 2005 Posted March 31, 2005 You are correct that it's not a 415 violation. However, your problem is the client deferred salary that didn't exist. You can't defer $16,000 if you only have $14,000 in compensation. I realize it's not as black and white as with W-2 compensation, but the same principal applies. "What's in the big salad?" "Big lettuce, big carrots, tomatoes like volleyballs."
No Name Posted March 31, 2005 Author Posted March 31, 2005 I'm looking to put something in the file and feel cursed that Blinky is the first responder. Can someone add to the thread acknowledging the respect we have for him, despite the moniker? (I should talk - No Name!) I'm guessing that the deduction answer is $14,000. Anyone wanna bite on that one.
rcline46 Posted March 31, 2005 Posted March 31, 2005 recharacterize some of the 'deferral' as employer contribution - say 20% of 14000 or $2800 - might help some.
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