self employment earnings/contribution calc

[Chippy]

Help! an employee became a partner mid way through the plan year. For 2015 he has 415 comp and self employment earnings. To keep it simple he has 85,000 in 415 wages and 85,000 in self employment earnings. Contribution formula is 7.5% of comp plus 5.7% of comp in excess of 118,500. Since he only became a partner mid way through the year, he is not taking a deduction for the employees' contributions only his own for the self employment earnings. The other partners are taking the deduction for his contribution on the 415 earnings.

How would I calculate his contribution and divide it between the 415 comp and the self employment earnings? He also has deferrals for the year.

thank you

[Lou S.]

I think you mean W-2 earnings, his 415 compensation is the sum of his W-2 pay while an employee and his Self-Employment earnings.

It would seem the most reasonable would be to calculate his contribution under the plan and prorate his portion.

Also you might want to ask the accountant and partners how exactly the expenses for pension are being allocated.

Hope that makes sense.

[mphs77]

Don't forget that the potion to deduct from earned income as 1/2 of the self employment tax will need to be adjusted for the portion of Social Security tax paid (the 6.2% portion) while an employee.