SEP Contribution Limits
My understanding has always been that total comp (W2 + K-1) counts towards the 25% up to $55,000.
However, a client’s CPA recently said only W2 wages count.
What income counts towards the limit?
My understanding has always been that total comp (W2 + K-1) counts towards the 25% up to $55,000.
However, a client’s CPA recently said only W2 wages count.
What income counts towards the limit?
Permalink Submitted by William Tuttle on Fri, 2018-08-24 19:50
W-2 Box 1 wages are compensation, K-1 inome is not.
Permalink Submitted by David Mertz on Fri, 2018-08-24 22:24
The only income on a Schedule K-1 on which a SEP-IRA contribution can be based would be net income from self-employment shown with code A in box 14 of a Schedule K-1 (Form 1065) from a partnership. It seems that your compensation is from an S corporation, not a partnership. As spiritrider said, income reported on a Schedule K-1 (Form 1120S) is not compensation.