What if I am a Partner in a Partnership receiving a year end K1 distribution but no W2 wages, when can I contribute?
A partner may defer (contribute to the 401k plan) on cash advance payments made during the plan year and before earned income is finally determined. The cash advance payments must be based on the value of the partner’s services prior to the date of payment and must not exceed a reasonable estimate of earned income for the individual’s taxable year. In addition the partner must have made a cash or deferred election before amounts are withheld from the cash advance payments. Treas. Reg. Sec. 1.401(k)-1(a)(6)(iv).
Related Questions
- Do special rules apply when a partnership or subchapter S corporation contribute to the HSA of a partner or 2% shareholder/employee?
- As a Partner invested in the Partnership exactly when do I receive a cash distribution from the profits of the Partnership?
- What if I am a Partner in a Partnership receiving a year end K1 distribution but no W2 wages, when can I contribute?
