compensation question yet again!!

[pmacduff]

One Plan; Two entities:  one entity is a partnership, partners receive K-1s.  other entity is a participating employer and a professional corporation (PC) (one person/participant). 

Participant takes a W-2 from the PC and makes the total ($18,500) deferral contribution on the W-2 wages but also has K-1 from the partnership (50% partner).

Should the plan use as income the K-1 from the partnership and the W-2 from the participating employer PC?

[justanotheradmin]

Is the K-1 earned income? I would confirm with the partner (or their CPA) that it is not passive (such as from real estate or an investment etc) 

If so, then check the document.

Ours would say yes, earned income from all entities counts towards plan compensation. The self-employment tax calculation may need to be adjusted as a portion of the social security that would typically be accounted for when using the K-1, would have already been paid as part of the W-2 withholding. 

If you use software to help calculate the SE-Tax adjustment for self-employment earnings to plan compensation, it may do it for you if input correctly. You should check with your help file or provider. Many allow you to input both W-2 wages and SE income into the calculation.