defined benefit plans and FICA


W

Will Trice

My wife is self-employed. If she sets up a defined-benefit plan, would
the contributions (sorry if that is the wrong term) to the plan be
exempt from FICA? This would make the plan more attractive than a
solo-401(k) (assuming the costs were reasonable) since 401(k)
contributions are still subject to FICA. Is a 401(k) match subject to
FICA?

For background, my wife's business is organized as an LLC and we file
Schedule C, but we could always reorganize as an S-corp or C-corp if
necessary to take advantage of retirement strategies.

Thanks for you inputs,
-Will
 
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W

Will Trice

Elizabeth said:
But, just out of curiosity, why would she not want to participate in social
security? I realize as a sole-proprietor she pays double FICA, but the
employer portion is not subject to income tax anyway.
I'm not saying that she doesn't want to participate in Social Security,
in fact she will still be paying FICA on earnings. I'm just exploring
options for reducing FICA.

-Will
 

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