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Simple IRA employer contributions for LLC minority member spouse, community property state

Forum|Forum|6 years ago
January 13, 2020
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I have a single-member LLC. I live in a community property state.

My spouse does some minor work for the LLC. If I add him as a minority member (say 2% ownership), what are the rules/limits around Simple IRA contributions for him?

Currently I pull profit distributions monthly into a joint account. The amount varies depending on profit.

Best answer by SusanY1

For your spouse to participate in the company SIMPLE IRA he would need to be an employee and receive a salary. You will also pay employment taxes on the salary paid to him.

As an employee of the LLC, he can contribute up to 100% of his salary (wages) not to exceed $13,000 for 2019 ($16,000 if he is 50 or older).

The company match is not included in the salary-deferral amount and increases the overall total amount contributed to the plan.

If he also participates in another salary reduction plan sponsored by an employer, the total contributions he can make to all plans cannot exceed $19,000 ($25,000 if he is 50 or older).

SusanY1Answer

For your spouse to participate in the company SIMPLE IRA he would need to be an employee and receive a salary. You will also pay employment taxes on the salary paid to him.

As an employee of the LLC, he can contribute up to 100% of his salary (wages) not to exceed $13,000 for 2019 ($16,000 if he is 50 or older).

The company match is not included in the salary-deferral amount and increases the overall total amount contributed to the plan.

If he also participates in another salary reduction plan sponsored by an employer, the total contributions he can make to all plans cannot exceed $19,000 ($25,000 if he is 50 or older).

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