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In an S Corp or C Corp, they are considered as shareholders by the IRS, not partners. Thus, the K-1 provides dividend information, not partner earnings, and none of that is counted as compensation for retirement plan purposes. In an LLC, the determination is made based on how the LLC has elected to be taxed. If they elect to be taxed as a corporation, then see above. Otherwise, if a partnership or sole prop, then yes, the K-1 is used, with adjustments, to get your net earnings from self-employments which can be used for reitrement plan purposes. edit: typo

I think the after-tax concept would be the most helpful for an owner-only plan (no employees) where the owner has net earned income of say about $60,000. They can contribute a deferral of $23,000 and then contributed an after-tax contribution to get the rest of the way to the 415 limit. The deduction limit would limit any pre-tax employer contribution to a low amount (25% of 415 comp or NESE), whereas the after-tax employee contribution is not a deduction so it's not held down by the 25% deduction limitation. Compensation still needs to be high enough as the 100% of compensation 415 limit still applies.

I concur with the enthusiasm and loyalty part - even though I am a Yankee fan (experienced the same down year <G>)