What's the maximum SEP IRA contribution limit for 2024 as an S-Corp owner?

The SEP IRA contribution limits can be confusing when you have an S-Corp structure. For 2024, you can contribute up to 25% of your compensation or $69,000, whichever is less. But here's the important part - for an S-Corp owner, only your W-2 wages count as "compensation" for SEP IRA contribution purposes. The K-1 distributions are not considered earned income for retirement contribution calculations. So you'll need to use just your W-2 salary as the base for calculating your 25% contribution limit. The K-1 distributions, which are your share of company profits, don't factor into this calculation. This is actually one reason why S-Corp owners need to be strategic about how much they pay themselves in salary versus distributions.

I was in the exact same boat last year trying to figure out my SEP IRA contributions for my S-Corp. After spending hours researching and getting nowhere, I finally used https://taxr.ai to analyze my tax documents and get a clear answer. I uploaded my previous year's tax return and corporate docs, and they explained that only my W-2 wages count for the SEP calculation (exactly 25% of those wages), while my K-1 distributions don't. They also helped me determine the optimal salary-to-distribution ratio to maximize my retirement contributions while minimizing employment taxes. It was super helpful seeing the actual math worked out based on my specific situation rather than trying to interpret generic advice online.

I tried taxr.ai after seeing this thread and I'm honestly impressed. I uploaded my 2023 tax docs and business paperwork and got really specific guidance for my S-Corp situation. It showed me that I had been under-contributing to my SEP IRA because I was only calculating based on a portion of my W-2 income. Turns out I could have contributed almost $15k more last year! The explanation about how the 25% limit works with S-Corps versus sole proprietorships was super clear, and now I've adjusted my 2024 contribution strategy. I'm actually planning to increase my W-2 salary component a bit to allow for larger retirement contributions, even though it means slightly higher employment taxes. The long-term tax benefit of the additional retirement savings makes more sense for my situation.

For anyone struggling to get answers from the IRS about SEP IRA limits or other tax questions, I found a service called https://claimyr.com that actually gets you through to an IRS agent quickly. There's even a video showing how it works: https://youtu.be/_kiP6q8DX5c I was on hold with the IRS for HOURS trying to clarify some confusing info about my specific S-Corp situation and SEP contribution limits. With Claimyr, I got through to an agent in about 15 minutes who confirmed that only W-2 wages count toward the 25% limit for S-Corp owners. The agent also explained something my accountant hadn't mentioned - that employer contributions to SEP IRAs don't count toward the $23,000 annual limit for traditional or Roth IRAs, so I could still max out my personal Roth IRA in addition to my SEP.

I need to admit I was completely wrong about Claimyr. After dismissing it as BS, I decided to try it anyway out of desperation when I had a complex question about my SEP IRA calculations that my accountant couldn't answer clearly. The service actually worked exactly as advertised. I got a call back when they reached an agent, and was connected with someone at the IRS in about 20 minutes. The agent confirmed that for my S-Corp, I can contribute 25% of my W-2 wages (not K-1 distributions) to my SEP IRA, up to the $69,000 limit for 2024. She also clarified something important - since my business makes the SEP contribution (not me personally), it doesn't affect my ability to contribute to my personal Roth IRA. Total game-changer for my retirement planning.

Something nobody's mentioned yet - you should consider whether a Solo 401(k) might be better than a SEP IRA in your situation. As an S-Corp owner, a Solo 401(k) would let you make: 1. Employee contribution up to $23,000 for 2024 (plus $7,500 catch-up if you're over 50) 2. Employer contribution up to 25% of your W-2 compensation This often allows higher total contributions than a SEP IRA, which only allows the employer contribution portion. The downside is slightly more paperwork.

Im curious if anyone knows about the deadline for making the SEP contributions? Is it the tax filing deadline (april 15) or the extended deadline if you file an extension?

Just wanted to add a quick note about timing - since you mentioned tax season coming up fast, remember that you have until your business tax filing deadline (including extensions) to make your 2024 SEP IRA contribution. So even if you file your personal return by April 15th, you can still make the contribution later if your S-Corp files an extension. Also, make sure your payroll records are clean for calculating that W-2 wage base. I learned the hard way that bonuses, overtime, and other compensation all count toward the SEP calculation, but things like health insurance premiums paid by the company and other fringe benefits don't. One more thing - if you have any other employees (even part-time), you'll need to contribute the same percentage of their compensation that you contribute for yourself. This can get expensive quickly, which is why the Solo 401(k) mentioned above might be worth exploring if it's just you.