Is there a combined S limitation for SEP contributions?

March 5, 2003

Subject:  SEP limit
From:  Judy
Date:  Fri, 21 Feb 2003

You said, "There is an overall limit on SEP contributions. The total of nonelective contributions to a SEP-IRA cannot exceed the lesser of 15% of the employee's compensation or $35,000 for 2001, 25% of the employee's compensation or $40,000 for 2002."

Can a small business, Husband and Wife Sub S Corp, contribute $40,000 for each of them on both husband and wife's separate salaries or are they limited to $40,000 combined because of the Sub S limitation? Has this changed in recent years?



Date:  28 Feb 2003

Hello Judy,

The limitation is separately computed for the husband and wife employees. There isn't a combined S limitation.

Good luck!
Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.

Home    Newsletter Archive    Introducing Michael Gray, CPA    Articles    Tax FAQ   Need Help?    Other Links

Michael Gray, CPA
2482 Wooding Ct.
San Jose, CA 95128
(408) 918-3162
FAX: (408) 938-0610
Hours: 8am - 5pm PDT Monday - Friday

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Our Blog

Subscribe to Michael Gray, CPA's
Tax & Business Insight

We respect your email privacy