Welcome back! Ask questions, get answers, and join our large community of tax professionals.
cancel
Showing results for 
Search instead for 
Did you mean: 

S Corp discretionary 401(k) contribution

christa
Level 1

S corp received income, but did not pay wages to 80/20 married shareholders.  They hope the S corp can make discretionary contributions to their respective 401(k) accounts to reduce income passed through to them.  My understanding is that discretionary contributions cannot exceed the lesser of 100% of the participant's compensation, or $55K (for 2018).  The plan administrator said since it is an LLC, husband and wife owned and (incorrectly) assumes they are 50/50 owners, it can be done as if it is a partnership.  Does anyone have experience in dealing with this situation?

0 Cheers

This discussion has been locked. No new contributions can be made. You may start a new discussion here

1 Best Answer

Accepted Solutions
IRonMaN
Level 15

If it is being taxed as a sub S for income tax purposes, I believe it is treated as such for retirement issues as well.  With that said, if no payroll was paid, there isn't going to be any 401k contribution.


Slava Ukraini!

View solution in original post

0 Cheers
1 Comment 1
IRonMaN
Level 15

If it is being taxed as a sub S for income tax purposes, I believe it is treated as such for retirement issues as well.  With that said, if no payroll was paid, there isn't going to be any 401k contribution.


Slava Ukraini!
0 Cheers