Accounting, Payroll & Pension Issues/LLC owner 401K

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Expert: - 3/20/2010


Question
Can the owner of LLC contribute to 401K $22,000(for age over 50), plus 20% of profit?  If yes, does the profit count(before or after $22,000 deduction)?

Answer
Please review the instructions for form 1040 line 28 -- Deduction for contributions to SEP, SIMPLE, and qualified pension plans. In addition, please review IRS Pub 560.

Both these are available from links at www.irs.gov.

There are likely web sites where you can enter your Sch C net income before taking into account your self-employment contribution and the deduction will be calculated for you.

If after reading this and you are still not clear, please ask a follow-up. In addition,k there is an income tax section of AllExperts.  

Accounting, Payroll & Pension Issues

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Arthur Naman

Expertise

General accounting and bookkeeping questions. How to do monthly bookkeeping, how to prepare financial reports. How to reconcile accounts.

I cannot answer questions pertaining to pension or retirement planning.

This is not a forum to have homework answered. Please do your own homework.

Experience

30 years' experience doing tax and accounting work

Education/Credentials
MPA from Univ. of Texas at Austin, MBA Golden Gate Univ, San Francisco CA

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