2% shareholder health insurance as wages

[Guest Ron Sevcik]

We have an s-corp which will be adding the health insurance premiums to box 1 but not box 3 or box 5 of the w-2. Our quesion is do we use that portion of his wages in determining the plan contribution. We have usually used the guideline that if it is subject to social security taxes, it is counted for pension purposes. The only exception was section 125 which is also added in for pension purposes. Since the shareholder cannot participate in the 125 plan, do I treat these extra wages similar to section 125?