Gene E. Utterback, EA, RFC, ABA <gene[at]alliancetax.com> wrote:

- quote -

This may be less unusual than you believe. Typically if a
limited partner is performing some non-core service (tax
accounting, investment advice) for the partnership they
might be paid a guaranteed payment. Obviously, it would
be abusive to disguise partnership income as a guaranteed
payment so as to defer it into a qualified plan, but there
are many many scenarios where the guaranteed payments are legit.

- quote -

I agree. I would not want to be responsible for a plan
with multiple unrelated participants without having a
retirement plan professional look over my work.

Beyond that, I have no additional thoughts other than to read
Pub 560, and the instructions for form 1065, which seem to answer
most or all of the questions posed here. Furthermore, the
following message board is potentially relevant:

http://benefitslink.com/boards/index.php?

One additional thought I have, not applicable to the immediate
situation, is that an alternative to setting up a plan at the
partnership level would be for the individual partners to each
set up a solo 401(k) plan. That would seem to avoid all of
the sticky reporting issues, and you could possibly end up
deferring more income (up to $49,000 in 2009).

Finally there is a theoretical question: does wrapping an
LLC around the partnership change anything? Probably some
opinions on this can be found at the benefitslink.com board.

Hope this helps.

Steve

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"volx" <victor.olex[at]gmail.com> wrote in message
news:9629380f-204d-46dd-9913-b0cdd4917e24[at]j38g2000yqa.googlegroups.com...
- quote -


Maybe - but I'm not sure because I don't have all of your information. And
you still have not answered my question - why does the passive partner get
guaranteed payments? Paying guaranteed payments may well mean that this
person is NOT passive at all.

With that caveat, payments into a company sponsored plan are on behalf of
the partner or member and could very well be considered additional
distributions to the member, to be taken on their personal return;

Or they could be a company only paid contribution to the plan, with no
impact on the member;

Or they could be treated as guaranteed payments subject to additional SE
tax.

It depends on the intricacies of how the plan was set up and what all was
being done and how it was being done.

Quite frankly if you're doing this return you are in over your head. Do NOT
expect to get a definitive answer here. Those of us who are pros who
respond here do so as a courtesy with the caveat that the information you
get from any of us is worth exactly what you paid for it - NOTHING.

If you are a nontax professional I would suggest you get help from a tax pro
right away. If you are a tax pro I would say that you still need help from
a professional experienced with such matters, you are foolish to rely solely
on what you get here from anyone - ME INCLUDED (and there is no better tax
pro than me! <G> ). Also, if you're a pro you need to be very careful here,
doing work for which you do not have the requisite experience will endanger
your ticket faster than just about anything else you can do.

Get professional help on this,
Gene E. Utterback, EA, RFC, ABA

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

On Mar 26, 5:40*pm, "Gene E. Utterback, EA, RFC, ABA"
<g...[at]alliancetax.com> wrote:
- quote -

Managing partner pays SE income on its entire share of partnership
profits whether he draws on capital or not. Do you know answer to my
questions re 401(k)?

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

"Steve Pope" <spope33[at]speedymail.org> wrote in message
news:gqgh6v$8v4$2[at]blue.rahul.net...
- quote -

I'm with Steve on this one!

How or why on Earth would a passive member get guaranteed payments while the
managing member gets none?

Gene E. Utterback, EA, RFC, ABA

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

volx <victor.olex[at]gmail.com> wrote:

- quote -

If you can figure out how to defer compensation into a qualified
plan without having paid SE tax on the entire compensation,
I'm interested in how that can be made to happen.

Steve

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >

An LLC is held jointly by a married couple. One of the spouses is a
active partner and LLC member-manager; the other is a LLC member and
passive. The passive partner receives guaranteed payments. The active
partner has no guaranteed payments.

(1) How to properly book individual 401(k) contributions made by the
company on behalf of its members? I saw conflicting views: as general
expense, or as guaranteed payment.

If it is a guaranteed payment it will result in additional SE tax for
passive partner. Since the amount of 401(k) contributions depends on
income from self-employment it would create a recursive relationship.

(2) The 401(k) contributions made by the company in 2008 but applied
to 2007 (typical case if you contribute between Jan 1 and Apr 15) are
company's expense for 2008 but can they be claimed as such? My
understanding is that they can't, because they were already deducted
on partners 2007 individual income tax returns. Putting them on 2008
schedule K-1 line 13, code R also does not appear right because the
amounts reflect prior year contributions. How do I report them
correctly?

(3) Finally, the company made a contribution to one of the partners 401
(k) during 2008 toward FY2008. I am pretty sure that this amount
should go on that partner's 2008 K-1 code R. Is that correct?

Thanks in advance!

--
<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2007) - All rights reserved. > << ------------------------------------------------------- >