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I work a hotel job where I receive cash tips, which I self report electronically on my paycheck. My employer's 401k program contributions are pre-tax. When I receive my paycheck the 401k deduction amount (20%) from my total gross earnings is not accurate and neither is the employer match. It appears I am being taxed on the full amount of my gross earnings and the 401k deduction amount is coming from what is left over after taxes, often several hundred dollars less than my calculations. After contacting HR about this, they don't have any real answers for me, only that because my tips are cash there is nothing to actually deduct from the paycheck to contribute to the program. Only after reaching out to them on multiple occasions for an explanation, they have now started to send me e-mails post pay period prompting me to write the hotel personal checks to cover the difference in the amount that was deducted and the amount that should have been deducted. This also does not account for the missing portion of the employer match. Am I missing something? I feel like because the 401k program is pre-tax contributions, the deductions should be coming out of my gross earnings, regardless of whether the earnings are self-reported cash tips. It seems as though not only am I getting taxed higher on my full gross earnings, but I am also losing out on money from the inaccurate employer match while also having to come out of pocket to catch up on the contribution amount. Can someone please help me understand this as my HR department has been unhelpful?

When is a contribution considered to be made "by the tax filing deadline?" in regards to being deductible for that plan year? We have a client who waited until the last day to file their taxes - and to submit their annual employer match on that same afternoon. The submission missed the record-keeper's daily cut-off for the ACH pull, so funds were not pulled from the employer bank account until the next day - the day after their tax filing deadline. The funds were deposited to the plan's trust the following day. Is the contribution considered "made" when the transaction is submitted online? Or when the ACH actually pulls? Or when the assets are actually deposited to the trust? Thank you for any assistance!

Example: 4 family members own a s corp biz (mom, dad and adult children), no other EEs. They currently pay the same salaries for all 4 (~30k/yr). They sold the assets of the business (~1.5M) early this year but retain the entity, which is now flush with cash. Just over 1M is not basis so subject to form 1231 cap gains.In order to minimize cap gains, we are considering a combination of 1) reallocation of equity (gifting some by parents to children using small part of lifetime gift exemption before eoy to keep cap gain liability at 15% (they should have gifted the equity before the sale but besides the point), and 2) starting a k/ps/cb plan to reduce AGI from 1120s, but naturally considering adjusting comp before eoy to get to funding levels for the ps/cb that make sense. Since the income of the business was minimal (sold early in the year), they will show significant loss of income in the business due to ER contributions to owners for ps/cb plan. However, they own several other businesses (no EEs other than the same owners) that will pay a management fee to the original co or the original may just become a holding co for the rest, to be determined, but income will flow into the entity after this year. My question is: 1) is there a limit to deductibility for ps/cb plans for an all owner/family relation company w no other EEs? 2) can losses due to contributions be carried forward like other corporate losses? Thx!

I was told an EA conference speaker mentioned that when applying the 31% deduction limit for a combo plan, that you can only use the participant's compensation if they are receiving an employer contribution in either plan. For example, I have a plan that is not Top-Heavy and they are not giving the HCEs an employer contribution in either plan but they are able to contribute 401(k). He is saying I would not be able to include their compensation when calculating the deduction limits. I wanted to use the 6% limit on the profit sharing contribution. The HCEs are not excluded they are just in their own class and get 0%. Would I not be able to use their compensation in calculating the maximum deductible contribution?