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Level 3

Best retirement plan for a multi-member LLC taxed as an S-CORP?

My business partner and I are a multi-member LLC taxed as an S-CORP. We pay ourselves reasonable salaries on W-2. We have one part time employee who works about 5 hours/week. She has been employed since 2018.

 

For 2021, we are trying to figure out the best way to maximize tax advantaged retirement savings. One thought is to raise our salaries, and go with a SEP IRA to maximize contributions, understanding that we will likely also need to contribute to our employee as well (which makes sense anyway).

 

Other than a SEP IRA, is there another plan we should consider? Thank you!

1 Best answer

Accepted Solutions
Level 10

Best retirement plan for a multi-member LLC taxed as an S-CORP?


@mjuszczak wrote:

the best way to maximize tax advantaged retirement savings.


 

If you want to "maximize" your retirement savings, a 401k would allow you to contribute more.

 

But there is no all-in-one answer.  A SEP is easier and usually has lower fees than a 401k.  

 

If you are interested in contributing a lot of money towards retirement, going to a tax professional and/or retirement specialist is the best idea for advice, so they can see the ENTIRE situation, and ask you about your plans, goals, etc.  The fact that your business is taxed as a S-corporation means you probably should be going to a tax professional anyways for that; corporate taxes are really not a do-it-yourself type of thing.

 

 

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1 Reply
Level 10

Best retirement plan for a multi-member LLC taxed as an S-CORP?


@mjuszczak wrote:

the best way to maximize tax advantaged retirement savings.


 

If you want to "maximize" your retirement savings, a 401k would allow you to contribute more.

 

But there is no all-in-one answer.  A SEP is easier and usually has lower fees than a 401k.  

 

If you are interested in contributing a lot of money towards retirement, going to a tax professional and/or retirement specialist is the best idea for advice, so they can see the ENTIRE situation, and ask you about your plans, goals, etc.  The fact that your business is taxed as a S-corporation means you probably should be going to a tax professional anyways for that; corporate taxes are really not a do-it-yourself type of thing.

 

 

View solution in original post

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