Thursday, August 18, 2011

Retirement Planning for the owner of an LLC?

My wife is starting a new business, an LLC, that is a Psychology private practice. She is the sole owner. She will be employing 1 person who will be doing Psychological testing for her. Unfortunately, due to state requirements, this person is required to be a W2 employee. She will be part-time, likely working 15 or so hours per week. My wife would like to be able to save for retirement. A standard IRA (or Roth IRA) does not allow her to save as much as she would like. We have been pointed into the direction of a SEP IRA. However, if we set it up so that 15% of my Wife's income goes into the SEP, it looks like we would also have to contribute 15% of the part time W2 employee's earnings as well? Is that right? Is there a plan that we can set up instead where the employee could participate if she chose, but if she did participate, the money would come out of her earnings? I cant understand why there isnt an option that is more like a 401k available for small businesses!

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