Can I contribute to a 401k (I am the employer, my compan) if my wife has a 403b plan as an educator?

[TheBusinessBoy]

Question is in the subject, I'd just like to know if this is allowed at the income levels.

Thanks!

[Carl]

What kind of business?

 - Single member LLC?

 - Single member LLC that has filed form 8832 with the IRS to be treated "like an S-Corp" for tax purposes?

 - Multi-member LLC?

 - Partnership?

 - S-Corp?

 - C-Corp?

Something else?

[TheBusinessBoy]

Ah, sorry for not elaborating on the company itself.

It's a C-Corp

[Carl]

What your wife has doesn't matter. That's why it's called an *individual* retirement account.

Calculations for an S corporation and C corporation are based on the W-2 salary that is paid to the business owner. For example, S corporation K-1 distributions (corporate profits) are not included when making the contribution limit calculation.

[TheBusinessBoy]

Though I am talking about the 401k plan, not the IRA plan, would I be able to contribute to a 401k plan?

As my wife contributes to a 403b and has a pension from work.

[Carl]

Your C-Corp can most certainly set up a 401(k) plan for it's employees, of which you are one if you receive any compensation reported to you by the C-Corp on a W-2. But get with legal counsel in  your state to make sure you set it up correctly. Doing it wrong can be quite $COSTLY$ to both you and the C-Corp. Makes the cost of legal help seem like a pittance in comparison.

[Carl]

Oh yeah, to further clarify; "I am the employer".

No, you are not. The C-Corp is the employer.

[TheBusinessBoy]

Ah, yes.

Last question (thanks so much again for helping out, I really do appreciate it) is this going to be fully tax deductible for the full $18,500 that I would contribute as the employee -- even if our AGI for my wife and I is $181,000

[Carl]

Contribution limits based on AGI still apply. While I do know things are not the same for a company sponsored 401(k), I don't know the particulars. That's why you want to get with an expert face-to-face in your state. But do be careful doing that. So called "estate planners" are a dime a dozen, and most of them are like me in situations like yours, and have no clue what they're talking about. YOu want someone with the heart of a teacher, *not* the heart of a banker. 🙂

I myself have a family lawyer (doesn't everyone?) whose area of expertise is estates, wills and probate. I suggest you seek out legal counsel with similar expertise, and make sure they are a licensed CPA or tax attorney of some sort. There are state laws that can directly affect retirement plans, and those laws do differ state to state. So competent legal counsel now will be far cheaper than finding out 20 years down the road you screwed up and now have to pay 20 years worth of fines, penalties and back taxes. That could easily wipe out a retirement account without even trying.

Overall, while I have no problem getting advice, suggestions or ideas from a public user to user forum such as this one, I most certainly would not rely in the information provided when it comes to *my* money. I suggest the same for you.