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"Employer" match on self-employed plans

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    "Employer" match on self-employed plans

    Is it allowable to arrange the match or profit-sharing component of a self employed person's retirement plan in such a way that it can reduce SE tax?

    My tax software wants to deduct both components on the front page of the 1040. I'd like to limit that to the SIMPLE or 401k deferral and pay the rest of it at the entity level so that it reduces SE tax.

    #2
    A self-employed individual cannot reduce SE tax by contributing to his or her own retirement plan. That is true for both the employee and employer portion of the contribution.

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      #3
      Originally posted by LCP View Post
      Is it allowable to arrange the match or profit-sharing component of a self employed person's retirement plan in such a way that it can reduce SE tax?

      My tax software wants to deduct both components on the front page of the 1040. I'd like to limit that to the SIMPLE or 401k deferral and pay the rest of it at the entity level so that it reduces SE tax.

      That is allowable only for employees he may have for whom he matches contributions. Not himself. Your software is doing it correctly.

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        #4
        Employer Match & Pension Contribution for Partner

        Along this same thought pattern..... A partnership has a 401-K and pension plan. Each partner contributes the max ($20,500 - over age 50, by reducing draws (deferral)). The partnership matches ($9,000), booked as a employer match and also contributes a pension deposit of $20,500. My question is how much passes through on the K-1 so that the partner reports it on his own 1040? They have other employees participating as well. I thought it was only the deferral portion, but after reading this, I'm not sure.

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