Simple IRA/SEP Question
I w-2 employee and have maxed out my 401K and Roth IRA contributions. I heard that if I have rental properties and invest in Tax Liens, I can give myself compensation. That compensation then can be for Simple IRA/SEP contribution.
My questions are:
1) Since I have maxed 401K, am I qualified?
2) Do I have to setup a business entity to qualify ? Thanks.
I would talk with a Third Party Adminstrator on this but if you have contributed to a 401(k) you cannot contribute to another qualified plan in the same calander year. What you can do is a profit sharing contribution. Depending on your age the combination of your defferal plus the profit shareing will be $40,000 or $42,000 when you make the profit sharing contribution you have to have a predetermined % given to your employees also. If you are making serious money over $300,000 per year you should look at a Defined Benefit plan or Defined Contribution plan. If you are rolling in the dough over $500,000 per year you might look at a 412i plan which has unlimited (100%) deferal which would be in the corp that has the RE in it. There is some serious implications to this plan. So talk to a CFP (Certified Finacial Planer) and your CPA. He won't be too familiar with the 412i so you will need the Planer to go over the details with him...
This is a great option to shelter $$$
To answer your question simply you cannot contribute to more than one qualified plan per calander year no matter how many corporations or entities that you have.