Partnership 401(k) Plan

[Guest Melissa Winslow]

I have a partnership in which a partner left during the plan year. His profit and capital interests were distributed to the remaining partners. Also, at the same time, the entity changed from a "regular" partnership to an LLP.

According the plan document and IRC Section 708, the partnership has not terminated, thus the plan remains an on-going plan.

My question centers on the measurement of earned income for the plan year. For those partners that remain, I have two K-1's for 2001. One for the "old" partnership and one for the new LLP. Would earned income for the plan year simply be the earned income for each short period during the plan year added together? This seems too simple, but I cannot seem to find any guidance on this.

[Guest b2kates]

for tax purposes the original partnership did not end. The LLC continues to use the same EIN number. Accordingly for the remaining partners, their earned income is what is reflected on both K-1s