Leaderboard

It sounds like the K-1 is issued to the partner's corporation, NOT the partner. The K-1 is not plan comp. This is not an uncommon setup, but its also often misunderstood. Based on the scenario you lay out, his comp for plan purposes is his W-2 from the corporation, not the K-1 from the partnership to the corporation. If the income passes from one entity to another (not taxed as income from self-employment), why would it count as plan comp?

Belgarath is right - can still do PS, but deferral time ended 4-15.

SECURE 2.0, Section 317, specifies that it is the time for filing the return of such individual for the taxable year..."(determined without regard to any extensions)"... Caveat - I did not check to see if any subsequent guidance modifies this. I see Paul already replied. My response was with regard to deferrals only.

Belgarath, you see another of the many infelicities in Congress’s work on the 2022 tax legislation. Internal Revenue Code § 414(v)(7)’s (or § 457(e)(18)(A)(ii)’s) constraint against non-Roth contributions does not apply to a participant without Federal Insurance Contributions Act (“FICA”) wages from the employer. That could result if the participant was a State or local government employee whose services were excluded from § 3121(b)(7)’s definition of employment. Of more immediate interest to some TPAs, § 414(v)(7) applies differently regarding otherwise similarly situated workers following whether the worker is, regarding the employer or deemed employer, an employee or a partner or other self-employed individual. To illustrate the point: A law firm’s 51-year-old partner whose preceding year’s compensation was $2 million is unburdened, but a 51-year-old associate or counsel whose compensation was as little as $200,000 is stuck with § 414(v)(7).

Agreed. If the income does not flow through to Schedule SE (which references K1 box 14) and is not subjected to SECA taxes then it cannot be earned income from self-employment.