Multi-Member LLC Compensation

[Guest Pat of RPC]

Have a multi-member LLC client with 4 members and 1 employee. Members W-2 wages range from $80,000 to $150,000. LLC has $700,000-$800,000 in profits to be divided among 4 members. They wish to do a 401k/PS Cross-Tested Plan. Can the K-1 income be combined with the W-2 income to reach the annual compensation limit of $245,000, allowing them to max out at $49,000 each? Otherwise they couldn't all max out if 25% was based only on W-2 compensation.

[Bird]

See this thread.