safe harbor calculation for dentis with self employment income

[KevinMc]

A dental practice has a safe harbor non elective 401-k where all employees have 3% of their W2 income contributed. What is the correct way to calculate the contribution for the Dentist who doesn't have W2 (salary) but self employment income? Any help greatly appreciated.

[Tom Poje]

most documents (if not all) should contain language something like:

Compensation of Self-Employed Individuals. Compensation of a self employed individual will equal his or her earned income.

if you are talking about trying to put in 3% every pay period, that is a little trickier, even with deferrals. The preamble to the final regs says

One commentator asked for clarification of the interaction between these timing rules and the rule under the regulations that treats a self-employed individual’s earned income as being currently available on the last day of the individual’s taxable year and whether this last day rule precludes a partner from making elective contributions during the year through a reduction in the partner’s draw. The restriction on the timing of contributions is not intended to prevent a partner from deferring amounts that are paid to the partner throughout the year on account of services performed by the partner during the year, and the final regulations have been modified to clarify this point. However, self-employed individuals who take advantage of this opportunity to defer amounts during the year must make sure that the amount contributed during the year will not exceed the limits (such as the limits of section 415) that will apply to the individual, based on the individual’s actual earned income for the relevant period.