Sign in to follow this  
Followers 0
Guest RS Vatalaro

LLC guaranteed payments - 401k deferrals from

1 post in this topic

I am increasingly running into this situation and wondered if anyone has any thoughts or can point to a good research resource.

Assume the LLC is taxed as a partnership. Effectively, the compensation for each partner for plan purposes would be K-1 adjusted by 1/2 SE (self employment) tax (I think?). What happens when there are guaranteed payments? Guaranteed payments are cash distributions each partner will receive annually under partnership agreement, and commensurately these payments reduce reported K-1 income (this is my understanding mechanically).

In this situation is the partner's plan compensation his guaranteed payment received plus his K-1 adjusted by 1/2 his SE tax? I do know both the guaranteed payment and the K-1 are subject to SE tax. This would make sense to me but I'd be more comfortable w/ some verification. Thanks for any help.

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now
Sign in to follow this  
Followers 0