Profit Sharing for the owner

[muthuradha]

I am a full time professional and contributed $22,500.00 in my employment.  My profit sharing is $18,000.00 with my employer.

Also, I do have an LLC (100% member) and did run payroll for $59,500.00 for self in my LLC during 2023. How much maximum Profit Sharing am I allowed to do in my LLC for TY 2023.  Any thoughts, please? 

[emina]

Hello and thanks for joining us today!

Per the IRS: 

A profit-sharing plan accepts discretionary employer contributions. There is no set amount that the law requires you to contribute. If you can afford to make some amount of contributions to the plan for a particular year, you can do so. Other years, you do not need to make contributions. Also, your business does not need profits to make contributions to a profit-sharing plan.

If you do make contributions, you will need to have a set formula for determining how the contributions are divided. This money goes into a separate account for each employee.

Contribution limits:

The lesser of 100% of compensation or $66,000 for 2023 ($61,000 for 2022; $58,000 for 2021; $57,000 for 2020, subject to cost-of-living adjustments for later years).

Please remember: If your LLC is taxed according to the default rules the members cannot be considered as employees and cannot receive a salary. However, if you choose to have the LLC taxed as a corporation, the members who actively work for the LLC can be considered employees and can receive a salary.

Resource link: https://www.irs.gov/retirement-plans/choosing-a-retirement-plan-profit-sharing-plan

[DashonnonH]

Adding to previous response, 

Making Contributions to a profit sharing plan, as a self employed individual, your must follow different requirements than an employer contributing to profit sharing plan for you. 

The info below comes from IRS.gov

• Profit-sharing plan: allows you to decide how much to contribute on an annual basis, up to 25% of compensation (not including contributions for yourself) or $66,000 for 2023 ($61,000 for 2022, $58,000 for 2021, $57,000 for 2020 and $56,000 for 2019).

You could contribute up to 25% of $59,600

https://www.irs.gov/retirement-plans/retirement-plans-for-self-employed-people#:~:text=Profit%2Dshar...).