David Woods, EA, ChFC, CLU wrote:

- quote -

Actually, the question was based on a corporate employee--in
which case 25% of wages is the answer. The 20% answer is a
"shortcut" that applies to the quirky definition of the
"wage equivalent" for self-employed individuals. In that
case, it is still a 25% contribution--but 25% *after*
deducting the 25% in computing the earned income subject to
the contribution.

Where that becomes important is if there are employees that
are also covered. Their contribution will be 25% of their
wages, not 20%, if you are putting back 20% into the owner's
account (assuming a plan that doesn't have permitted
disparity in its allocations).

And, as noted, for the S corporation owner-employee, the
contribution would be 25% of his wages.

--
Ed Zollars, CPA
Phoenix, Arizona

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"Thomas Conley" <pinnacle[at]frontiernet.net> wrote:

- quote -

You can find information on your situation in IRS Pub 560

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Thomas Conley wrote:

- quote -

Right, it did.

The corporation may thus contribute as a corporate deduction
up to 25% of the affected salaries.

ChEAr$,
Harlan Lunsford, EA n LA

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"Thomas Conley" <pinnacle[at]frontiernet.net> wrote:

- quote -

Maximum net contribution is 20%. It was 20% in 2002 as well.

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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What is the SEP-IRA %age for 2003? I thought I saw somewhere that it's gone
from 15% in 2002 to 25% in 2003. I'm looking for the %age of W-2 wages for
the sole owner of an S-corp.

Regards,
Tom Conley

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