S corp profit sharing plan calculation

Submitted by mike silvers on Thu, 2017-04-06 12:16

Is the calculation based on income of the S corp or W2 income?

I also seem to remember that its calculated differently for more than 2% shareholders and employees.

Do the contributions go into 1 company account or separate employee accounts.

Is it to late open for a 2016 deduction.

Thank you for your help



Submitted by mike silvers on Tue, 2017-04-11 13:18

Anyone have an answer?



Submitted by John Peterson on Tue, 2017-04-11 19:12

1. Contributions calculated on W-2 wages, casn’t include K-1 pass thru income2. Contributions can go to one pooled account or individually directed accounts depending on plan recordkeeping setup3. Too late for calendar 2016 profit sharing plan (had to establish plan by 12/31/2016) but can still establish a SEP (up until S corp filing deadline including extensions) 



Submitted by William Tuttle on Tue, 2017-04-11 23:37

  • An S-Corp’s >2% shareholder-employees and other employees profit sharing contributions are calculated the same way. The profit sharing contribution for both = W-2 Wages * the plan contribution rate.
  • You might be thinking of self-employed individuals and their employees. The employee’s profit sharing contribution also = W-2 Wages * the plan contribution rate. However, self-employed individuals use a special contribution rate = plan contribution rate / (1.0 + plan contribution rate). That special contribution rate is applied to their net self-employment income = net business profit – 1/2 SE tax.


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