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Malcolm

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The plan sponsor for a law firm 401k plan is set up as an LLC taxed as a partnership - equally owned (1/3) by three different Affiliated/Participating employers all taxed as an S-corp. The LLC employees a few non-owners, and each of the 3 S-corp partners are 100% owners of his or her respective firm. 

Since the three affiliated, participating employers (S-Corps) pay their owners W-2 compensation, the W-2 compensations are eligible for deferrals and contributions for the plan. For Pre-tax deferral contributions, payroll deductions are withheld for the owners (W-2 comp) and funded by the individual S-corp. It's a Safe Harbor match plan with a Plan Year/annual determination period for the match. 

Since the pre-tax deferral contribution will be deducted via payroll and funded from the owners' individual S-corp, does the corresponding Safe Harbor match need to also be funded from the individual S-corp. - or does the match need to be funded by the LLC taxed as a partnership?

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There are a couple of assumptions being made - perhaps you could clarify or confirm - 

Are all four entities part of the plan?  
Just because they are an affiliated service group doesn't necessarily mean they are all part of the plan. Some plan documents do not automatically pull in related employers, others do, best practice is to have them all signed on as participating employers if that is the intent. 
Similarly - Are you sure the W-2 compensation is eligible for deferrals? 
Part of this may depend on the answer to the first question, but I would also double check the plan's definition of total compensation, and plan compensation. It could be that the compensation has to be included for plan compliance, but if it is from an entity that isn't part of the plan, it might not be eligible to defer from. 

To answer your actual question - does your plan document say that contributions attributable to the payroll of a specific participating employer must come from that employer? this kind of language is fairly common on documents for MEPs, but I see it on some single employer plan documents too. 
If the document doesn't say, then the plan probably doesn't care where the required contributions (Safe Harbor match) come from. That's an issue for the business CPAs to all work out when doing the deductions for the four entities.
Are you the business accountant trying to figure that part out? 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

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Also - I don't mean to belabor your question - it was just unclear to me from your original post if you were using the term "participating employer" in the more general sense, as in - they are using the plan. 

Or if the more technical sense - meaning they have actually signed the plan document on behalf of their entities and the entities are specifically listed in the document by name as participating employers, or they have signed participating employer agreements that are part of the document. Sometimes this is referred to as being an Adopting Entity. 

Since "Affiliated/Participating employers" was the phrase used in the original post, I assumed (perhaps incorrectly) that you were using Participating employer interchangeably with Affiliated employer, or in a similar more general sense. 

But the answer to your question likely lies in the specific, technical question - are they adopting entities (whether by proactive signing, or by default provision in the plan document)? And if the message board readers know the answer to this question, they can be more helpful. Good luck. 

 

I'm a stranger on the internet. Nothing I write is tax or legal advice. 

I'd like a witty saying here, but I don't have any. When in doubt, what does the plan document say?

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More facts are needed, but it appears that the 3 S-Corp partners in the LLC form an A-Org Affiliated Service Group with the LLC.  At any rate, to answer your question, the LLC, if taxed as a partnership, is a flow-through.  It's the LLC's partners (i.e., the 3 S-Corps) that are looked at for purposes of both financial and tax accounting. It is the partners who are deemed to be making the matching contribution for both purposes.  

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