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Potential client has ownership interests in a few management companies. Each company was set up to manage one operating company that has employees. Each management company receives 100% of its business from the operating company it manages. Client has no ownership of operating companies and management companies have no employees. Each pairing is a management affiliated service group. Payments from operating pass through the management company to an equity holding company. Equity holding provides client with K-1 self employment income. This income reflects on 1040 SE. The management companies are disregarded where the client has self employment income with regard to the management companies? 301.7701-2 Tracing the income to a company within an affiliated service group, does that designation attach to the income , precluding client from adopting a 1-man DB plan in his sole proprietorship with the net earnings? Or would the client sole proprietorship fall outside the affiliated service group, as the income comes from enough operating companies that the 50% management business is not met?

New client to us. Tells us company is a 51/49% partnership with wife/husband. We received draft K-1s for both. K-1 for wife has a dollar amount on line 14a. K-1 for husband (whose K-1 lists him as a limited partner) is showing nothing on line 14a. Has anyone seen this before? It is my contention that the husband does not have compensation for retirement plan purposes. There is nothing on the guaranteed payments line for either partner.

I have a 3% nonelective safe harbor 401(k) Plan that is terminating effective 10/31/2016. The safe harbor is to be calculated based upon compensation from January - October. This is due to a business acquisition, so safe harbor status is maintained. There is one owner who receives Schedule C income. Safe Harbor has been deposited for the 3 non-owner employees throughout the year. The owner has taken $10,000 distributions periodically and the bookkeeper has made 3% safe harbor deposits based upon these amounts to the owner's account. The owner's actual earned income for the year will not be determined until sometime in the first quarter of 2017, but we would like to have all assets paid by 12/31/2016 to prevent another plan year. So...how do I calculate the owner's safe harbor contribution from 1/1/2016 through 10/31/2016? 1) Treat him as having earned $0. This would be a problem because, not only did he have safe harbor deposits, but he also deferred during the year. 2) Have the CPA estimate his earned income from 1/1/2016 through 10/31/2016 and calculate the safe harbor for the owner based upon this estimate. Any other options? Has anyone dealt with this conundrum? Thank you!

A plan is sponsored by a partnership of 75 partners. It is a safe harbor nonelective (3%) 401(k) with profit sharing. A handful of partners are leaving the organization over the next few months. If their earned income is all deemed to be paid on the last day of the taxable year (12/31/16), then they would have no earned income while still "employed" by the partnership, and thus no safe harbor nonelective contribution for the year. Is that treatment correct, provided no plan provisions to the contrary? I know this has been discussed previously, but I don't think I will be able to find it until BL offers a "Remedial Search 101" webinar.

For plan years after 2012, does the new additional medicare tax reduce a self-employed person's earned income for retirement plan purposes?