Technical topics regarding tax preparation.
27-Jan-2023 10:02am
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Can a rental property llc open retirement plans for its owners/employees such as sep, solo401k etc? I read that passive rental property llc can not do that and want to confirm.
27-Jan-2023 10:06am
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You have to have earned income as a base for retirement plan contributions.
Rental income isn't earned income. It's not that the entity can't establish a plan; it's that there won't be any base to allow for a contribution, unless you pay wages or GPs.
~Captcook
27-Jan-2023 10:17am
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To add to what CaptCook mentioned, rarely does it make sense to convert rental income to earned income just for a retirement plan contribution. It's a tradeoff that many affected clients just deal with, unless their real estate portfolio is huge and they'd like to diversify their investments and accounts, often at a higher cost than just maintaining the status quo.
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