S Corp Employer contribution and W2 Income

[tomriddle]

Hi All,

I want to know exactly what should the "compensation" amount be against which 25% limit of employer contribution is calculated . This is for a single owner/employee S Corp. eg. Let's say the employee has 100k as wages and FICA taxes are 8k (for the sake of simplicity). And the employee contribution is the maximum allowed 18k. Would the 25% be against 100k or 92k (100-8=92k after FICA taxes) or 80k (100-8-18=80k after FICA and employee contribution) ?

From the research on this forum and also from the IRS publication at https://www.irs.gov/pub/irs-pdf/p560.pdf , it appears that it should be 100k in the above example. But I haven't seen a clear answer anywhere yet. Can someone confirm this or shed some more light on this ?

Thanks in advance for all the inputs.

[mphs77]

What is the definition of Compensation used in the Plan Document?

[Bird]

It's $100,000.

You would never reduce it for FICA, and while you might define comp for allocation purposes as net of deferrals, I don't think that would apply for deduction purposes. I guess it might if you tried hard enough to screw things up.