401K Contribution

Submitted by Neal Gordon on Fri, 2023-10-06 17:45

Can a business owner who gets income on a W-2 plus income reported on a K-1 combine both incomes for the purpose of calculating his contribution to his company 401k or will only be able to use the W-2 income?

Thanks

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Permalink Submitted by David Mertz on Fri, 2023-10-06 18:05

If the business owner receives both a W-2 and a Schedule K-1 from the same business, the business is apparently an S corp. Income reported on a Schedule K-1 (Form 1120-S) from the S corp is not compensation and is not a factor in determining contributions to a 401(k). Only the compensation reported on the W-2 is considered when determining the maximum permissible 401(k) contributions.