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bambisamares
Level 1

Traditional IRA Contributions

I have a client that is an LLC.  He and his business partners have started making contributions to a traditional IRA account.  None of them are on any kind of payroll.  Do I create an expense account - payroll expense - labeled "Retirement Contributions" and post the contributions to this account? OR is this considered an Owner's Draw since the IRA's are personal retirement accounts even though the business is making the contributions, not the owners.

2 Comments 2
Rustler
Level 15

Traditional IRA Contributions

If the partnership is taxed as a partnership, then the contribution from a partnership (and sole proprietor) to a personal IRA are equity drawing.

If the partnership has elected to be taxed as an s-corporation, then the partners must be on payroll, and that changes things.

bambisamares
Level 1

Traditional IRA Contributions

That was my conclusion as well!  Thank you for answering!

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