401K contribution for full-time spouse of sole propritor filing MFJ Form 1040.
Category: Business and Money > Accounting
Asked by: erikleetl-ga
List Price: $25.00
16 Nov 2004 12:51 PST
Expires: 16 Dec 2004 12:51 PST
Question ID: 429810
My law firm is set up as a sole proprietorship. My wife works full time at the firm as an associate. I file a 1040, as married filing jointly. My wife does not take a salary (W2), but takes a draw, like I do. I pay self-employment tax for one person. I offer a 401(K) plan to my employees (18 of them). My question is: Subject to highly compensated employee testing, is my wife eligible to contribute to our 401K plan? Thank you.
Re: 401K contribution for full-time spouse of sole propritor filing MFJ Form 1040.
Answered By: taxmama-ga on 29 Nov 2004 04:29 PST
Hi Erik, Your wife would be eligible if she were on payroll. Since you already have a payroll, with your 18 employees; and since you're already paying self-employment taxes on your wife's earnings (i.e. your net profit), it won't cost you anything extra to put her on payroll. In fact, if you offer medical benefits to your employees, you can offer them to your wife, as well. She would be able to have family insurance coverage...and be able to deduct medical expenses - if you offer a flex-plan to your other employees. Best wishes, Your TaxMama-ga
|There are no comments at this time.|
If you feel that you have found inappropriate content, please let us know by emailing us at email@example.com with the question ID listed above. Thank you.
|Search Google Answers for|