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How to calculate SEP contribution for S-Corp one owner / employee

I need to know how to calculate the maximum SEP employer contribution for a S-Corp with one owner who is the only employee. Schedule E net profit = $200k, W-2 income $26,000.
Thanks!

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SEP Calculation Worksheet

There are several calculators available online. I like the one at Pensions Online This calculator compares several different retirement plans so you can see which ones would give the best opportunity for deferral.

I think your maximum contribution may be much smaller than you expected. For corporations, the contribution limits are based on your W-2 income. You opted to take a relatively small salary and so your maximum contribution is going to be proportionally small.

Here's a worksheet that shows the 2006 limit and how to calculate the maximum contribution:

SEP Calculation Worksheet (2006) Example Your Situation
1. Compensation (from W-2) $100,000 $26,000
Calculating Your Maximum Profit-Sharing Contribution
2. 2006 Maximum Profit-Sharing contribution $44,000 $44,000
3. 2006 Maximum Profit-Sharing contribution as a percent of compensation 25% 25%
4. Multiply Line 1 by Line 3 $25,000 $6,500
5. Maximum Profit-Sharing contribution 3–Enter the lesser of Line 2 and Line 4 $25,000 $6,500

It's important to understand how the calculations work and what the maximums are based on before you select a retirement plan. If you had opted for a Individual 401(k) instead of the SEP, your maximum contribution would have been $21,500.

Even with the SEP doing a little planning in December could have helped. You could have increased your salary, thereby increasing your SEP contribution.

Sorry I don't a have better answer for you. :(

L:)

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