S-Corp compensation

[Guest mrtnak]

I have a client that owns an s corp and gets both w-2 compensation and Schedule C income from the company. Can I use both W-2 and the schedule C as his gross compensation when calculating contribution amounts, etc. Or can only W-2 be used?

[E as in ERISA]

Schedule C is used to report income earned as a sole proprietor, not incorporated or not as part of a partnership. His S-Corp income would be on a W-2 and Schedule E. But none of the income on Schedule E would be self-employment income. Only the W-2 income would generally count -- and only for purposes of the corporation's plan. It's not self-employment income.

[Lori Friedman]

Did the S corporation's accountant report the individual's salary on Form W-2 and his taxable medical insurance benefits on Form 1099-MISC? I've seen this happen more times than I can even recall.