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Posted

We have a two member LLC husband, wife.  She does not share in the profits.  We keep getting different answers on what they can as members contribute to the company 401K.  Best I can come up with is the wife would be limited to her guaranteed payments and her elective deferral and the husband would have his elective deferrals and limited by his compensation which is should be the profit.  So for him it would be up to 76500.   Any assistance with this would be appreciated.   Thanks!

Posted

What they can or cannot do and how much can be allocated to each member depends upon how the LLC is taxed.  Is the LLC taxed as a partnership, S-corp, or C-corp? 

Since you mention guaranteed payments and did not mention W-2s, I would guess taxation as a partnership. On the other hand, distinguishing between compensation and profits suggests that taxation as a corporation is a possibility.  Guessing and not knowing could be the reason there have been different answers.

Posted

Consider also whether each partner did or didn't provide services to the company.

For any of a capital interest, a profits interest, or a payments interest that does not vary with either capital or profit, it's possible for a partner to get a payment even if she provided no service during the year, or even never provided a service to the company.

Peter Gulia PC

Fiduciary Guidance Counsel

Philadelphia, Pennsylvania

215-732-1552

Peter@FiduciaryGuidanceCounsel.com

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