Health Insurance & Retirement Plan Contributions

A TTS S-Corp can deduct health insurance and retirement plan contributions.

Health insurance and retirement plan contributions require self-employment income (SEI), but trading income is not SEI. Exception: If a trader is an options dealer or commodities dealer trading Section 1256 contracts on the exchange where they hold that dealer status, that trading income is SEI (IRC §1402(i)).

A sole proprietor (individual) with trader tax status (TTS) cannot pay themselves compensation, so they cannot arrange earned income to deduct health insurance and retirement plan contributions.

Traders eligible for TTS in an S-Corp can pay officer compensation to unlock deductions for health insurance premiums. Increasing officer compensation can also help maximize a Solo 401(k) contribution, based on sufficient profits in the S-Corp.

Investment companies without TTS may not compensate owners for unlocking employee benefit plan deductions.

Learn about retirement plan options for TTS traders on our Retirement Solutions page. Learn about entities for traders on our Entity Solutions page.

For more in-depth information about S-Corp officer compensation, health insurance premium deductions, and retirement plans, read Green’s Trader Tax Guide.

  • Trading Business Expenses
  • Trader Tax Status: How To Qualify
  • Green’s Trader Tax Status Qualification App
  • Section 475 MTM Accounting
  • Health Insurance & Retirement Plan Contributions
  • Trading Business Expenses
  • Trader Tax Status: How To Qualify
  • Green’s Trader Tax Status Qualification App
  • Section 475 MTM Accounting
  • Health Insurance & Retirement Plan Contributions
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