Numbers789

I want to make sure that I understand the ACP test correctly. Example: Safe Harbor Plan - 3% non-elective No matching contribution After-tax contributions are allowed If the NHCE ACP is 0%, then no HCE can make an after-tax contribution. If the NHCE ACP is 2-8%, HCEs can make after-tax contributions of the NHCE average plus 2% If the NHCE ACP is above 8%, HCEs can make after-tax contributions of the NHCE average x 1.25 If so, it sounds like the sponsor would need to add some form of a matching contribution (possibly only to NHCEs) if they want to offer the ability to make after-tax contributions.

The doctors have historically paid themselves W2 wages above the compensation limit. Each doctor has a different CPA. One of the CPAs wants to lower their doctor's wages below the compensation limit but I told them that could negatively impact the retirement calculations. In turn, the plan administrator said they will include their K-1 income which makes the W2 amount moot for the calculations. I feel like I must be missing something as I've asked this same question to four different TPAs. Two said they only use W2 wages and two said they would include K1 income (including the plan administrator on the plan).

I've been receiving mixed opinions on this topic. Working with a medical practice. The practice is a partnership where the employees are paid. The partners of the practice are each of the doctors' S Corps. The S Corps are adopting employers of the plan. The doctors don't receive any W2 income from the partnership. K1s are issued to each S Corp. In turn, each S Corp issues a W2 and K1 to the owner. The plan administrator is stating that they will consider both the W2 and K1 issued by the S Corps as compensation for retirement plan calculations. I was under the impression that you can only use W2 compensation when looking at a S Corp but apparently the partnership overrides that rule? Thoughts?