Partnership compensation

[Nassau]

Can someone explain how partnership compensation works with respect to elective deferrals and which year the contributions should represent?

[Bird]

That's pretty vague question, but deferral contributions are for the year the partner designates them for, so if they elect to make a 2012 contribution and deposit it in 2013, it's for 2012. They reduce taxable income for that year, but they don't affect what we (or at least I) call earned income which is the base for employer contributions.

[12AX7]

The 401 (k) deferral election for a partner participant must be in effect by the end of the plan that it relates to. That should help in determining to which year the deferral would apply. There have been discussions here on the boards about making these elections.