topic Distributions of Income for a LLC with S-Corp Status in Business & farm

Distributions of Income for a LLC with S-Corp Status

cmanahan5star — Wed, 13 Nov 2024 19:56:52 GMT

I have an LLC that is an S Corp for tax purposes. I employ my husband in the business. We both are earning a reasonable salary through the LLC and I have set up a solo 401k that the LLC is contributing into for both of us. Can you help me better understand the following: 1) I believe I can get a distribution of net earnings made to me by the end of the year? What about my spouse? 2) It is also my understanding that I can contribute to the 401K in excess of the individual withholding limits for both of us? Can you help provide more insight here?

Re: Distributions of Income for a LLC with S-Corp Status

mblumenthal — Wed, 13 Nov 2024 20:13:56 GMT

An LLC can contribute to a 401(k), specifically through a "Solo 401(k)" plan if the LLC is considered a single-member entity with no other employees besides the owner (or possibly their spouse), allowing them to contribute as both the employee and employer to their retirement account;. I am not sure about your question concerning distributions. This can be done anytime.

Re: Distributions of Income for a LLC with S-Corp Status

cmanahan5star — Wed, 13 Nov 2024 20:36:25 GMT

Distributions can be made to shareholders only? Or can their spouse receive as well? Is there a limit here?

Re: Distributions of Income for a LLC with S-Corp Status

mblumenthal — Wed, 13 Nov 2024 21:11:43 GMT

I want to add that the same would apply to an S-corp as long as the non-discrimination rules are followed. Since it's just you and your husband the rules apply to both of you. Since there are no other employees you don't have to worry about non-discrimination.