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    2 Replies Latest reply on Apr 2, 2012 9:14 PM by cp123

    Partnership LLC SEP plan

    cp123 Wayfarer

      We are a small LLC consulting company with 2 members (partners), no employees.  In the past we have never taken a "guaranteed payment" since we don’t know how our business is going to turn out for the year.  At the end of the year we do split the net profit (50% - 50%) on our K1's but leave it in the business to reinvest.  It is pretty rare that we take a draw.


      We do have regular full time jobs and contribute to our company's 401k.  Now we are thinking about starting up a SEP plan as we max out our full time job 401k contributions. I see that you can contribute to a SEP and 401k.


      My questions are:


      - SEP is based on 25% of your business compensation.  Is that 20% off the "Guaranteed Payments”?

      - Can our SEP be based on the 50% - 50% net profit split?

      - Is it better to do "Guaranteed Payments" and what is the best way to estimate it if you do not know how your year is going to turn out?