Individual K

[Guest kkcfp]

Hi,

I am over 50 with an indvivual k plan and my salary is 100k. The 25% company profit sharing contribution is 25k plus I defer 22k fir a total of 47K. Maximum contribution to a plan for 2010 is $54,500.

Can I have the company make a matching contribution to get me up to the max? The plan is a TD Ameritrade Indvidual Prototype plan.

Thanks for your help.

[Lou S.]

You will have a deduction problem. The maximum employer deduction is 25% of pay, whether that is called profit sharing or matching doesn't matter. So if you are the only eligible employee and your wages are $100K, the max deductible er contrib will still be 25% or $25K.

edit: plus the 401(k) deferral. oh and if you are or will be 50 on or before 12/31/2010 you can make the catchup contrib as well so you are limited to the $47K in your original post.

[austin3515]

I just want to clarify that you provide yourself with a w-2 (i.e., you are being taxed as corporation and not a sole prop). If you are a sole prop, the max deductibel is likely 20K, because 20 / (100-20) = 25%. i.e., the contribution itself reduces your income. Your accountant should be able to help you with this calculation.

[Guest SloWorker]

Hi,

I am over 50 with an indvivual k plan and my salary is 100k. The 25% company profit sharing contribution is 25k plus I defer 22k fir a total of 47K. Maximum contribution to a plan for 2010 is $54,500.

Can I have the company make a matching contribution to get me up to the max? The plan is a TD Ameritrade Indvidual Prototype plan.

Thanks for your help.

Max elective deferral is 16500 plus 5500 catch up.

Max employer contribution (profit share or match) is 25000 (assuming elective deferrals are included in comp).

Total permitted is the 47000 you're already contributing.

I just want to clarify that you provide yourself with a w-2 (i.e., you are being taxed as corporation and not a sole prop). If you are a sole prop, the max deductibel is likely 20K, because 20 / (100-20) = 25%. i.e., the contribution itself reduces your income. Your accountant should be able to help you with this calculation.

If the plan includes elective deferrals this wouldn't be the case, correct?

[austin3515]

Whether the plan includes elective deferrals has nothing to do with the form of entity -or perhaps I misunderstood the question.

[K2retire]

The business structure, or more specifically, whether the business owner reports income on a W-2 or a Schedule C, determines whether or not the income must be reduced by self employment taxes and employer contributions when calculating the maximum employer contribution and deduction.