Tax

Have a tax question? Ask a tax Expert

Ask an Expert,
Get an Answer ASAP!

I have a client that is a partnership with 4 partners. Not…

Customer Question
I have a...

I have a client that is a partnership with 4 partners. Not all of the partners are interested in participating in a retirement plan but one is. What options are available to that partner if she receives a Form K1 with guaranteed payments?

Accountant's Assistant: The Accountant will know how to help. Is there anything else the Accountant should be aware of?

That's it, thanks!

Submitted: 7 months ago.Category: Tax
Show More
Show Less
Ask Your Own Tax Question
Answered in 6 minutes by:
12/21/2017
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 7 months ago
Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 14,861
Experience: Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
Verified

So sorry, but for purposes of participating in qualified retirement plans, IRC section 401(c)(1) treats partners in a partnership (and LLC members of an LLC treated as a partnership) and sole proprietors as employees.

...

If the individual is a sole proprietor or a partner, they are also owner-employees under IRC section 401(c)(3), for THIS purpose.

...

In either case, they cannot set up their own retirement plan(s) to the exclusion of the other employees or partners (if in a partnership).

...

Another Heads-up, not infrequently, partners or LLC members (of LLCs treated as partnerships) make salary deferral contributions during a plan year based on their guaranteed payments and then find out after the end of the plan year (assuming the plan and the partnership have the same year-end) that the partnership or LLC has a net loss.

...

SO, they don't have earned income for purposes of the retirement plan and can't make any "salary deferral" contributions or receive any employer contributions.

...

Also see this (old but still applies): http://hr.cch.com/news/pension/070111a.asp

Ask Your Own Tax Question
Tax Professional: Lane, JD, CFP, MBA, CRPS replied 7 months ago

THis person, not HAVING workplace coverage can certainly do 5500 into a DEDUCTIBLE IRA, and another 5500 for spouse if one exists, and has no workplace coverage or is under the income limit if covered by a plan (and another 1000 each if they're both over age 50) ... all deductible.

Ask Your Own Tax Question
Was this answer helpful?

How JustAnswer works

step-image
Describe your issueThe assistant will guide you
step-image
Chat 1:1 with a tax professionalLicensed Experts are available 24/7
step-image
100% satisfaction guaranteeGet all the answers you need
Ask Wallstreet Esq. Your Own Question
Wallstreet Esq.
Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
Satisfied Customers: 586
586 Satisfied Customers
Experience: 10 years experience

Wallstreet Esq. is online now

A new question is answered every 9 seconds

How JustAnswer works:

  • Ask an ExpertExperts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional AnswerVia email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction GuaranteeRate the answer you receive.

JustAnswer in the News:

Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.

What Customers are Saying:

I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response...

T.G.WMatteson, IL

I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight.

BonnieChesnee, SC

Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation.

JohnMinneapolis, MN

Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with.

OrvilleHesperia, California

Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help.

Mary C.Freshfield, Liverpool, UK

This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!!

AlexLos Angeles, CA

Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult.

GPHesperia, CA

< Previous | Next >

Meet the Experts:

Wallstreet Esq.

Wallstreet Esq.

Tax Attorney

586 satisfied customers

10 years experience

Mark D

Mark D

Enrolled Agent

1,338 satisfied customers

MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Richard

Richard

Tax Attorney

4,512 satisfied customers

29 years of experience as a tax, real estate, and business attorney.

PhillipsEsq.

PhillipsEsq.

Attorney-at-Law

59 satisfied customers

B.A., M.B.A, J.D.

Robin D.

Robin D.

Senior Tax Advisor 4

15,569 satisfied customers

15years with H & R Block. Divisional leader, Instructor

Megan C

Megan C

Certified Public Accountant (CPA)

8,655 satisfied customers

Licensed CPA, CFE, CMA, CGMA who teaches accounting courses at Master's Level

jgordosea

jgordosea

Enrolled Agent

2,885 satisfied customers

I've prepared all types of taxes since 1987.

< Previous | Next >

Related Tax Questions
An S-Corp sole shareholder loaned the Corp monies. Corp is
An S-Corp sole shareholder loaned the Corp monies. Corp is paying her back with interest. I deducted the interest expense on the 1120S BUT can I show the interest paid to her on the K-1 line 4 or do I… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
The LLC owns residential real estate rental.Is it make sense
The LLC owns residential real estate rental.Is it make sense a management company received carried interest from the LLC?… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a couple of questions on how solo 401k contributions
I have a couple of questions on how solo 401k contributions to partner need to be entered on partnership 1065 form … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I'm trying to figure out how a partnership "deducts"
I'm trying to figure out how a partnership "deducts" contributions to a partner's retirement plan … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I'm working on an 1120 and it received a K1 with guaranteed
Hi, I'm working on an 1120 and it received a K1 with guaranteed payments and self employment earnings. I think I just ignore both, is this true … read more
PDtax
PDtax
Owner
Master\u0027s Degree
1 satisfied customers
I get a K1 form and a W2. Box 4 on my K1 is the same amount
I get a K1 form and a W2. Box 4 on my K1 is the same amount as my total earnings on my W2. When I enter the mount of K1 box 4 into turbo tax is acts like it is doubling my income and causing to me to … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
1) I am setting up a 401(k) retirement plan for an employer.
Hello,1) I am setting up a 401(k) retirement plan for an employer. Normally, 401(k) contribution for employees are based upon earned income. However, the owners don't take a salary only a distribution… read more
keeperumiami
keeperumiami
Sr Financial & Tax Consultant
Bachelor\u0027s Degree
1 satisfied customers
I own an LLC and I collect a weekly draw of $450. How do I
i own an LLC and I collect a weekly draw of $450. How do I report this income for tax purposes?… read more
emc011075
emc011075
Senior Tax Specialist
Bachelor's Degree
16 satisfied customers
My client has LLC (partnership tax treatment). Based on the
My client has LLC (partnership tax treatment). Based on the operating agreement one of his partners needs to be reimbursed for health insurance. 1. In 2015 partnership did not have any income (only ex… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Partnership with a 401K plan. Partnership contributes
Partnership with a 401K plan. Partnership contributes $10,600 for each partner, they call it "employer match". Partner, my client, also contributes another $18,000 of his own money, total of $28,600. … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
My wife and I own a partnership. We are 50/50 partners. I do
My wife and I own a partnership. We are 50/50 partners. I do 99% of the work in the partnership. Can I change her from a 50% partner to a 10% partner to save on self employment taxes when we file our … read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Client was given 20% ownership ownership for work performed
Client was given 20% ownership ownership for work performed "sweat equity". Nothing was recorded on "books" for compensation. Do I need to make sure to include as guaranteed payment and issue 1099 for… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
Question. A client has an LLC and he is a financial Planner,
Question. A client has an LLC and he is a financial Planner, the LLC is in both his name and his wifes name. He does advertising and seminars, in which he had to lend his LLC money in order to pay for… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I have a two member LLC where the members want to change the
I have a two member LLC where the members want to change the allocations to either 99 percent to member A and 1 percent to member B, or 100 percent to member A and none to member B. The reason for doi… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
I own 25% of a LLC partnership and am the Managing partner,
I own 25% of a LLC partnership and am the Managing partner, I take a guaranteed payment for running the company (the 3 other partners are passive and non resident). The guaranteed payments are reporte… read more
Lane
Lane
JD, CFP, MBA, CRPS
14,861 satisfied customers
I am preparing a 1065 - Among 6 of the members , I need help
I am preparing a 1065 - Among 6 of the members , I need help with 2 of the members -2 couples have their ownership and MR & Mrs as tenants by the entirety. I know that each spouse of both couples will… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
i have a client who is a partner in an llc. he is also the
i have a client who is a partner in an llc. he is also the manager of the cattle feed lots (llc). the llc pays him a salary of $40,000 a year. how is the tax figured on this? the k1 amount is added to… read more
LEV
LEV
Retired
Bachelor's Degree
14,896 satisfied customers
We have an LLC, taxed as a partnership, with 3 individual members
We have an LLC, taxed as a partnership, with 3 individual members and one tax exempt org. member. The 3 individual members provide services/expertise to the LLC that result in the income the LLC earns… read more
jgordosea
jgordosea
Enrolled Agent
Bachelor's Degree
2,885 satisfied customers
Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Disclaimer: Information in questions, answers, and other posts on this site ("Posts") comes from individual users, not JustAnswer; JustAnswer is not responsible for Posts. Posts are for general information, are not intended to substitute for informed professional advice (medical, legal, veterinary, financial, etc.), or to establish a professional-client relationship. The site and services are provided "as is" with no warranty or representations by JustAnswer regarding the qualifications of Experts. To see what credentials have been verified by a third-party service, please click on the "Verified" symbol in some Experts' profiles. JustAnswer is not intended or designed for EMERGENCY questions which should be directed immediately by telephone or in-person to qualified professionals.

Show MoreShow Less

Ask Your Question

x