"S-corporation payments to shareholder-employees are generally split between W-2 compensation and pass-through distributions. While distributions can be tax-efficient from an employment-tax perspective, shareholder-employees must still be paid reasonable compensation for services performed, and distributions generally do not count as 'compensation' for qualified plan contribution purposes. As a result, an owner who minimizes W-2 wages may also be unintentionally limiting retirement savings opportunities."  MORE >>