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Setting up a solo401K: accountant says I should seek retirement planning advisor ins

Home Retirement Accounts Setting up a solo401K: accountant says I should seek retirement planning advisor ins

  • Avatar ChicSkiier 
    Participant
    Status: Physician
    Posts: 15
    Joined: 06/24/2019

    For 2018: So net income $35K, salary $0, distribution $19K.

    I plan to meet with cpa (just waiting to get my new laptop up to speed with back up drive) to discuss salary etc for 2019.

    #238534 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2465
    Joined: 03/01/2018

    How much yearly 1099 income anticipated going forward

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238540 Reply
    Liked by ChicSkiier, Peds
    Avatar Peds 
    Moderator
    Status: Physician
    Posts: 4695
    Joined: 01/08/2016

    how can one justify a salary of 0 for doing telemedicine work?

    #238544 Reply
    Avatar ChicSkiier 
    Participant
    Status: Physician
    Posts: 15
    Joined: 06/24/2019

    Projected income 2019: at least $175K.

    I can’t remember exactly what my cpa said but I think he said the first year was reported as no salary for so little income. He initially listed my income as $23k and he had to amend it after I realized he didn’t put the right number from my 1099.

    I can’t estimate expenses right now without my laptop.

    Thanks for your thoughts.

    #238545 Reply
    Avatar jacoavlu 
    Moderator
    Status: Physician, Small Business Owner
    Posts: 2465
    Joined: 03/01/2018

    S Corp for a side hustle is almost always wrong when you have wages in employed position that exceeds the social security wage base, which you do

    because you will pay excess 6.2% SS tax from the Corp on any wages to you from the Corp. Which you would not pay as a sole prop.

    Retirement contributions from Corp 401k only come from wages. Not distributions. So low salary equals low 401k contributions.

    Also an unreasonably low salary (certainly any salary that is less than distributions) is  an aggressive accounting tactic which may May result in attention from IRS.

    The S Corp also makes running solo 401k more complex. Everything more complex. Payroll. Additional accounting costs. Corp tax return. Possible state entity taxes.

    The Finance Buff's solo 401k contribution spreadsheet: https://goo.gl/6cZKVA

    #238562 Reply
    Liked by Tim, saildawg, Peds
    Avatar ChicSkiier 
    Participant
    Status: Physician
    Posts: 15
    Joined: 06/24/2019

    Aargh…Chewbacca groan.

     

    #238591 Reply
    Liked by Tim

Reply To: Setting up a solo401K: accountant says I should seek retirement planning advisor ins

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