Suppose husband has a single member LLC, has a SEP IRA, and makes more than enough to max out annual SEP contributions.
I'm curious if the wife could be added to the LLC to allow the wife to also receive SEP contributions and thus reduce overall tax burden. Let's suppose the following:
- Let's not address risk of divorce, etc. I understand this is a true risk but I don't want to get sidetracked from the tax question.
- LLC always makes a profit so no need to address losses in a tax year
- Non community-property state
- 50-50 split between couple and taxed as partnership
- Wife's involvement is purely passive
In this situation, could SEP IRA contributions be made to both the husband and wife?