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    8 Replies Latest reply on Aug 15, 2009 5:41 AM by PigSkin

    Using non-salary money to fund retirement plan?

    cognitive77 Newbie
      I own an S-Corp and would like to take some of our company's capital towards a retirement plan. Does anyone know if this is possible? I'd like to leave our meager monthly salary alone if possible.
        • Re: Using non-salary money to fund retirement plan?
          DomainDiva Ranger
          Yes its possible. Talk to your accountant, there is a tax schedule that has to be filed.
          • Re: Using non-salary money to fund retirement plan?
            BDS INC Adventurer
            Absolutely possible, have you talked to a plan provider yet? Most of the providers be it Fidelity or others will walk you through the process and even work with your accountant providing the proper documentation. Talk to a plan provider, then go over the options with an accountant.
            • Re: Using non-salary money to fund retirement plan?
              cognitive77 Newbie
              I guess I need to call around to more financial advisers. My accountant is one I have to sometimes pry information out of sometimes. On one hand I like that he is so conservative, the other I don't like having to really push to find ways of really utilizing my money.

              The one financial adviser I have spoken with keeps wanting to set me up with a simple IRA. When I did question him about whether or not the company could put back money into a retirement package for it's employees, he'd just tell me "well, that's gonna cost your more, the simple IRA is cheap".
                • Re: Using non-salary money to fund retirement plan?
                  WEBillions Adventurer
                  If it bothers you enough, you might want to consider changing accountants. It's rather nice to have someone who will give you suggestions but not make up your mind for you. That's kind of their job.

                  There are many different kinds of retirement plans. Consider profit-sharing, defined-benefit, 401K, target-benefit, and simiplified employee purchase plans as options. Each one has it's own benefits.
                • Re: Using non-salary money to fund retirement plan?
                  EagleHill Newbie
                  For my clients that are one man shops (or have their wife on salary), I usually recommend a Self-Employed 401(k) or as some call them Solo 401(k)s. We usually use Fidelity's since it is easy to set up, no set up fees or annual fees, can buy any investment not just Fidelity's no load funds. If net profits are around $156,000, we can defer around 45,000 of that each year (50,000 if over age 50). Where do they get the money to fund this each year. Any where but usually the business. We find this is much better than just paying yourself a small salary, even though your social security and medicare expenses are higher. Don't forget if you pay more into SS you do get bigger COLA ajusted checks some day. Something to think about.
                  • Re: Using non-salary money to fund retirement plan?
                    wealthoffice Newbie
                    In your post you said you had an s-corp but never mentioned any employees.

                    Anyway's, from your question it sounds like you pay yourself and maybe your employees a w-2 income, and then there is money left over that you will either draw or pay as additional w-2 income to yourself.

                    The simple answer is yes, your corporation can assume all costs regarding a retirement plan, and there are special tax credits for starting a plan for you and your employees.

                    You will find that if you ask an accountant most will say open a SEP and if you talk with a broker he will say open a SIMPLE. Its best if you talk with an advisor that actually specialized in the area, and doesnt just have the ability to do it.

                    please feel free to email me at for more info and I can atleast point you in the right direction or tell you what to look for when you are ready. Good luck.

                    • Re: Using non-salary money to fund retirement plan?
                      PigSkin Newbie
                      The new 401(k) Safe Harbor is worth looking into for your need. You also need to contact your local life insurance association for the names of insurance agents who work this market. They can give you information and walk you through the process without obligation or costing you money, only your time. Of course, if you purchase a product through them, they will make a commission.