Can a 100% owner of a Sub "S" corp, who has reasonably high earnings, put elective deferrals into his corporation's 401(k) plan, up to the $14,000 max for 2005, and, if so, does this reduce his W-2, box 1, wages?
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Just like any other employee,
the S corporation officer can contribute to the employee max.
CAUTION. Contributions now are for 2006. Can't go back in time for 2005.
Doug -
S Corp 401k
Yes a 100% owner can contribute to the 401k plan. For 2005 this was $14,000. And, yes this will reduce Federal Taxable Wages.
MattI would put a favorite quote in here, but it would get me banned from the board.Comment
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401(k) plans are subject to testing. If there are other employees, the 100% owner cannot contribute more than 2% above the average deferral rate for all other non-owner, non-highly compensated employees.Comment
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3rd party admin
Yes I forgot to mention that part. The 3rd party administrator would verify that information. If that is the case they should look at doing a safe harbor 401k.
MattI would put a favorite quote in here, but it would get me banned from the board.Comment
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