Limits on a self-employed individuals integrated allocation

[Guest Enda80]

When it comes to the taxable wage base and integrated contribution, do special limits set in when dealing with a self-employed individual regarding the 5.7% and the taxable wage base?

[Bird]

All of the same limits and rules apply, they are just harder to apply because it's a circular calculation. You don't get a pass because it's hard. It's possible to do it algebraically, but it's generally easier to set up in a spreadsheet.

[ERISAnut]

Sorry for being a Johnny-Come-Lately on this one but an important point to note:

The algebraic calculation the Bird mentioned begins at Total Schedule C after it has been reduced for 1/2 the Self Employment Taxes. The point being made here is that if the Self Employed individual's total compensation is so high that it will remain above $230,000 after all reductions for 'employer contributions', the your calculation becomes one of simple math.

Having a $500,000 starting point could leave the resulting 'earned income' at $300,000. This amount will be capped at $230,000. This would be different than having a starting point of $230,000; where ever dollar contributed now effectively reduces your excess compensation.

This may save a ton of worry when the owners earned income is so far above $230,000 that the complex calculations are avoided.

If your population is small, enter the comp amounts for owner and employees (without names and SSNs of course) and I can show you how to calculate.

[PensionPro]

Does anyone have ideas on the Excel formula to be input in the cell for calculating the sole proprietor's integrated contribution, i.e. splitting the earned income between plan compensation and plan contribution after deductions for employee contribution and self-employment taxes have been applied?

[Tom Poje]

this is another of my 'useless?' spreadsheets that may or may not perform the calculation you desire. there are no instructions, and I've tweaked the original version to do some other things, that probably only a nut case like myself would want - well, like calculating an estimated % to reach a desired contribution goal. but then since I know how I wrote the formula I know that amount is only an estimate so that it will take a couple of passes to arrive at the actual desired results.