Partnership 401(k)'s

[Guest Thornton]

What is compensation for partners in a partnership 401(k) plan? A partner defers during the calendar plan year, apparently from draws. At year end, the K-1 for each partner shows a loss. Must the deferrals be refunded?

[Guest pdaniels]

It is my understanding that partner's must make their k election prior to the last day of their taxable year (i.e., 12/31); and this is last day of plan year also; do they just guess a %, and hope ADP passes; and if not, can actual deferral % be less once k-1 completed to pass test? (our prototype has language that will let you cease or reduce HCE deferrals during the plan year in order to pass test by the end of the year.)

Any experience with partner 401ks?