Quick Check on 401k

[Unregistered]

My only share holder client had payroll deduction of $13,000 for 401k for 2005.

I think she can still deduct $29,000 as profit sharing before 09/15. Total limitation is $43,000 for 2005.

Her Compensation on W-2 is $134,750 (Box 5). Box 1 is 122,750

Thanks

[Unregistered]

Exmple of 401K

I believe that 3% of wages - Mandatory in Employer's safeharbour plan portion and then emplyer can have any % for matching.

(A) Employee #1: Salary (box 5) on w-2 is 174,000
3% of $174,000 = 5220, PLUS 5.62% (Matching) of $174,000 = 9,780 for a total of $15,000

(B) Employee #2: Salary (Box 5) on W-2 is 24,206
3% of $174,000 = 726 PLUS 3.76% (Matching) of $174,000 = 910 for a total of $ 1,636

So deduct on Line 17 of 1120S - $15,000+$1,636 = $16,636

Can some one confirm this?

Thanks!

[veritas]

The contribution limit for 2005 is $13,000 deferral and 25% of wages up to a limit which I don't have in front of me. I believe the total for age under 50 is 43,000 in 2005.

[Unregistered]

The contribution limit for 2005 is $13,000 deferral and 25% of wages up to a limit which I don't have in front of me. I believe the total for age under 50 is 43,000 in 2005.

I think "25% of wages" does not apply to 401 k but it is for sep IRA

Not sure

[S T]

Individual 401K?

Here is a link to a worksheet I found for Individual 401K. One is for unincorporated businesses and the other for incorporated businesses.

http://www.schwab.com/public/schwab/home/account_types/small_business_retirement/individual_401k/contribution_worksheet.html?cmsid=P-1042674&lvl1=home&lvl2=account_types&refid=P-1042681&refpid=P-998263

The contribution limit for 401K individuals is $14,000 for 2005 under age 50 with $4,000 catchup provision over age 50, Maximum contribution between employer and employee for 2005 can not exceed the lesser of 100% of the participant’s compensation or a specific dollar limitation. The dollar limitation is $42,000 in 2005. The amount of compensation that can be taken into account when determining employer and employee contributions is limited. to $210,000 in 2005.

Sandy

[veritas]

Sandy,

You are correct. I am at my office this am and looked up the limits.

[Penelope]

2006 rules individual 401k

Is it correct that the maximum contribution increased in 2006? I recently looked at an individual 401k plan for taxpayer over age 50 and came up with $20,000 individual contribution and $29,000 company contribution (= 25% of $116,000 salary). This maxed him out at $49,000 for the year.

Hoping for some confirmation. Thanks.

[Bees Knees]

Yes. According to the chart on page 1-3 of TTB, the maximum 401(k) contribution increased from $18,000 in 2005 to $20,000 in 2006. The 25% of W-2 wage remains the same.