Do I report employee solo 401 contribution on Sche...
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Returning Member

Do I report employee solo 401 contribution on Schedule K-1

My wife and I have a LLC treated as a partnership for tax purposes. We set up a Solo 401k. We have made both employer contributions and employee contributions. My question is:

 

On the partnership Schedule K-1 what 401K contributions are included? Do we include both employee and employer contribuions or just the employer contribution?

7 Replies
Employee Tax Expert

Do I report employee solo 401 contribution on Schedule K-1

You would only include employer contributions on the K-1s.  The "employee" contributions are entered when you prepare your personal tax return.

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Returning Member

Do I report employee solo 401 contribution on Schedule K-1

I am confused. Another person post a similar question and recieved this response:

 

"Assuming that these contributions are to the partnership's retirement plan and that is a type of plan such as a 401(k) that accepts elective deferrals, the code R entries in box 13 of the past year's Schedule's K-1 were done correctly and this year's was not.  The code R entry in box 13 should be the total of both employer and employee contributions to the partnership's retirement plan."

 

In another post fron same person:

 

"For these to appear on line 28 of Form 1040, your Schedule K-1 must show with code R in box 13 the total amount of contributions made through the partnership and with code A in box 14 your Net Earnings (Loss) From Self-Employment.  In the follow-up to entering the box 13 code R amount, enter in the Payments to 401K (non-Roth plan) box the portion at was elective deferral and in the Employer Matching Contribution to 401K box the portion that was the profit-sharing contribution."

 

To clarify, in may case:

 

My wife and I have a partnership LLC with no employees. This is our only earned income. We have a Individual (solo) 401K with Vanguard. Based on the calculation from PUB 560, chapter 5 (Table and Worksheets for the Self-Employed), we can have a employer contribution (profit sharing of 9288). In addition we want to make an employee contribution of 25,000 (19000 plus 6000 catch up). 

 

You answer seem to indicate box 13 should be 9288.  Correct?

Employee Tax Expert

Do I report employee solo 401 contribution on Schedule K-1

You do need to enter the full amount of the retirement contribution in box 13 and use the code "R". After you do that in TurboTax, you will have an opportunity to code the contribution as "Payments to 401K (non-Roth plan) and "Employer matching contribution to 401K."

 

Then, the total contributed will show up on schedule 1 of your form 1040 as it should.

 

I believe @DavidD66 was referring to a situation where you have self-employment income in addition to partnership or corporate income with a 401-K plan and want to make a SEP or solo 401-K contribution, in which case you would enter the contribution on the personal tax return.

 

Also, you need to make sure you did not deduct the pension contribution on your partnership return, since that would double up the deduction. 

 

You can enter pension contributions on your partnership return, but only if they are for employees that are not owners.

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Returning Member

Do I report employee solo 401 contribution on Schedule K-1

This is a llc partnership. The employer contribution is coming from my earned income. 

 

If I filled out the information as you just suggested I get an error during the federal review using TurboTax Deluxe. 

Expert Alumni

Do I report employee solo 401 contribution on Schedule K-1

No, only if the partners take a withdrawal from their personal accounts to pay. It should show as a withdrawal rather than the partnership paying for it.

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Returning Member

Do I report employee solo 401 contribution on Schedule K-1

To clarify:

The partnership is a LLC for my wife and I. We sell on Amazon. This is our only earned income.

 

Employer contribution was 9288 was was paid out of earned income of the partnership.

Employee contribution was 25000 paid out of earned income of the partnership.

 

What is reported on box 13 of schedule K-1.

 

If both then turbotax deluxe is happy.

If just employer then turbotax deluxe is happy but I have no place to report the 25K. If I override the entry on schedule 1 then I get an error when I run federal 

Expert Alumni

Do I report employee solo 401 contribution on Schedule K-1

That's the problem because the employee contribution should not come from the partnership. You can take a draw down from the partnership capital accounts of both you and your wife for $12500. This will reduce your partnership capital accounts by $12,500 for both as that amount should be paid out of your personal accounts. The amount of $12,500 should be in box 19 (Distributions).

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