LLC and an IRA

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Topic Author
aquifer
Posts: 334
Joined: Sat Oct 20, 2012 9:01 am

LLC and an IRA

Post by aquifer »

Three of us are considering building a storage unit. We would form an LLC and own the property in the name of the LLC. Although I welcome suggestions concerning the idea itself, my real question is whether I can use the LLC to increase my tax advantaged retirement savings. I currently max out my 401k through work, and I max out my Roth contribution via the back door. I have some I-bonds as well. The LLC will not specifically pay us any type of wage, we will just split any profit 3 ways after funding a cash reserve for misc repairs etc. What else do you need to know to answer my question? Thanks as usual for your thoughts.
Topic Author
aquifer
Posts: 334
Joined: Sat Oct 20, 2012 9:01 am

Re: LLC and an IRA

Post by aquifer »

Bump. Sorry to bump my question, but it fell to the second page and I'm hoping someone can offer an idea. How can this business be structured to give me more tax sheltered space? Thanks again.
SteveKL
Posts: 500
Joined: Mon Sep 03, 2012 8:13 pm

Re: LLC and an IRA

Post by SteveKL »

There is nothing "special" about an LLC that offers its owner(s) additional tax-sheltered savings. If you were an employee of the company AND drew a salary (not just partnership income) you could make an IRA contribution from those wages, just as the company could set up a 401 or SEP or whatever on your behalf.

Since you already max out your available tax deferred savings opportunities, your LLC income will show up on your K-1 return just like any partnership or S-corp income would, and be subject to income tax accordingly.

Lots of good info here: http://www.irs.gov/Businesses/Small-Bus ... ompany-LLC
jared
Posts: 554
Joined: Sun Jul 06, 2008 11:57 pm

Re: LLC and an IRA

Post by jared »

This is very unlikely to increase tax advantaged space. Rents from real estate are excluded from the definition of net earnings from self-employment.
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