SEP Retirment for S corop

[ardi600]

I have not set a sep for a s copr before. I was wondering would anybody be able to answer my questions?
i understand the contribution is up to 25 percent of wages paid to the share holder, correct?
where do i take the deduction on 1120s, line 17? if so are the any more forms required to file to start this sep?
my client paid himself 72,000 from the s corp(w2). he also worked for a company in which he maximized his 401K. i know it is okay to have a sep while participating in a SEP, but how i don't know how to calculate the contibution amount.
i would appreciate any help,

[ChEAr$]

I have not set a sep for a s copr before. I was wondering would anybody be able to answer my questions?
i understand the contribution is up to 25 percent of wages paid to the share holder, correct?
where do i take the deduction on 1120s, line 17? if so are the any more forms required to file to start this sep?
my client paid himself 72,000 from the s corp(w2). he also worked for a company in which he maximized his 401K. i know it is okay to have a sep while participating in a SEP, but how i don't know how to calculate the contibution amount.
i would appreciate any help,

First, no. Shareholders are not eligible to be covered by a SEP; it's only for employees.
But maybe we should assume you mean the shareholder is also a corporate officer and therefore a statutory employee of the corporation.

See publication 590 for details of when the corporation must have set up the SEP. It used to be that it had to be established by October 1st of the tax year in question. If changed, I haven't heard about it; BUT it may have been.

[Matt Sova]

First, no. Shareholders are not eligible to be covered by a SEP; it's only for employees.
But maybe we should assume you mean the shareholder is also a corporate officer and therefore a statutory employee of the corporation.

See publication 590 for details of when the corporation must have set up the SEP. It used to be that it had to be established by October 1st of the tax year in question. If changed, I haven't heard about it; BUT it may have been.

What exactly are you talking about?? A shareholder of an S-Corporation can definitely be covered by the SEP. The original post stated that the owner took a wage on a W-2 of $72,000. If they put in 25% they will have to do it for all other employees as well.

[ardi600]

he is the only

employee, so he does not have to offer sep to anybody else. I have read some pubs but it still not clear for me on the limit of the contribution. his s corp sep contribution would be 25 percent of 72,000(w2). now since he put 22,000 in his 401k at a company he also worked at, could he still take the full sep deduction(25% x 72,000).

[Matt Sova]

Yes

He can participate in both. This is from the IRS FAQ about SEP's

http://www.irs.gov/Retirement-Plans/Retirement-Plans-FAQs-regarding-SEPs-Establish-a-SEP

[Lion]

You may be thinking about SIMPLEs that need to be set up (not funded) by 1 October of the previous year. A SEP can be set up through the extended deadline for the return.