My CPA just informed me my business can't deduct the 401K contributions that I have withheld from each paycheck. It's a C corporation with a self-directed 401K plan. Kind of hard to believe that I'm only discovering this now and I truly don't understand why it's treated differently than salary. That's a pretty hefty tax penalty on $18,000 in employer contributions. Maybe enough of a tax penalty that contributing doesn't even make sense for me instead of taking it as salary and putting it into non-tax deferred investments.
However, regardless, it looks like the employer contributions are legitimate business expenses. At least the "matching" part maybe.
1. Is that the part about employer contributions not being deductible really the case?
2. Does that mean I shouldn't contribute personally to the 401K until the business contributes it's full $35,000 maximum in employer contributions?
At least the latter would be a deductible business expense...
I really can't believe never coming across this little detail before, so any good links or references would be great.
Thanks!
~ Chris
However, regardless, it looks like the employer contributions are legitimate business expenses. At least the "matching" part maybe.
1. Is that the part about employer contributions not being deductible really the case?
2. Does that mean I shouldn't contribute personally to the 401K until the business contributes it's full $35,000 maximum in employer contributions?
At least the latter would be a deductible business expense...
I really can't believe never coming across this little detail before, so any good links or references would be great.
Thanks!
~ Chris
Comment