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No, you cannot do both. The maximum contribution to qualified retirement plans (defined contribution) is 49K for 2009. The SEP has that limit, but 401K does not. If you are already contributing to 401K as employee did S Corp also do matching contribution? Do some research on profit sharing plans; it might be a solution for you.
or this one http://401kcenter.com/design/match.htm
401k's are a subset of profit sharing plans which usually allow elective/discretinary employer contributions on top of deferrals and matches. However, the total of deferrals and employer contributions including matches can't exceed $49K for 2009. Employer matches are limited to 25% of Compensation. The lowest salary to max out with full use of 401k is $130K if under age 50 or $108K if age 50 or over.
You may have to amend your plan before 12/31/09 depending on its terms. Talk to you plan administrator.
If you want to put away more than $49K there may be other defined benefit or target benefit plans to team up with the 401k. It all depends on your situation.
Thanks everyone for responses - now i'm really confused - I have not been doing matching
retired from former employer with pension - started single owner S Corp, 401k thru Fidelity, over age 50 and the only employee, will pay myself $50k in wages for 2009 and pass thru $ to Schedule K
So for 2009
Employee deferral = $16,500
Catch up 5,500
total employee deferral $22,000
profit sharing 12,500 Profit sharing limited to 25% of $50k wages = $12,500
Is employer matching also an option? goal is to defer as much as possible into tax deferred vehicle(s)
You are at the max for the wages you are declaring without going to a defined benefit plan. I only mentioned matching in case it was part of the plan you bought.
Is there profit in the S Corp after you have declared your $50K salary?
You don't likely have a sufficient earnings history for a standard defined benefit plan, but you might get more out of a cash balance or target benefit plan. Talk to an actuary. Being over 50 can get you a lot more pensiobn deduction for the same salary. They other great features are that they aren't limited to 25% of wages and the 401k doesn't reduce the overall contribution limit. However, if the defined benefit or cash balance plan resulted in a greater deduction, you would still do the 401k of $22,000, but not the profit sharing of $12,500.
Is there profit in the S Corp after you have declared your $50K salary? Yes
have adequate pension from retirement so prefer to defer max of this income at this time
Will do some googling on cash balance and target benefit plan. So where does one find an actuary?
You can email me using dublincpa
atgmail.com and I can get you a referral. They are enrolled with the IRS so the state doesn't really matter. However, I am in the Chicago suburbs as indicated in my profile.
You don't need an actuary, you need Qualified Plan Administrator. You can contact me and I can refer you to one. But I just want you to know its not cheap.
You need a plan administrator that employs/contracts with an actuary or you need an actuary that deals with retirement plans. Even though Schedule SB doesn't get filed with a 5500-EZ, it is required to be prepared and retained by the trustee.
Regardless, I agree that it won't be cheap, but it may be worth it to you in the long run.
Do you have an accountant? He or she may be able to provide a couple options. You may want to take a pass though if the person doesn't have a couple names ready. That likely means they don't deal with it often.
Best of luck in your search.