You and the other person are not "partners" in the S corp but are instead shareholders in the S corp. As shareholders, you are both employees of the S corp. Neither of you is self-employed with respect to the S corp and neither of you can independently make contributions to a self-employed retirement plan based on income from the S corp. Any retirement plan contributions based on income from the S corp would have to be made to a retirement plan established by the S corp, with contributions up to the statutory maximums based on each individuals wages reported on the Form W-2 provided to the individual by the S corp. Any SEP contributions must be the same percentage of compensation for all (both) employees. Employer profit-sharing contributions to a 401(k) plan can be subject to anti-discrimination testing, depending on the type of plan. (Unless the other shareholder is your spouse, a 401(k) plan would not be a solo 401(k) plan.) Since you are employees with respect to the S corp, not self-employed, you do not report on your individual tax returns any deduction for retirement contributions to the retirement plan established under the S corp. The deduction is taken on the S corp's tax return.
Additionally, if the other shareholder has separate self-employment income, that shareholder's separate self-employment business and the S corp might be considered a controlled group for the establishment of any retirement plan, depending on the relative proportion of ownership shares involved. All businesses in a controlled group are considered to be a single employer for the purpose of establishing a retirement plan.
If the SEP plan is established with Form 5305-SEP, no plan other than another SEP plan can be maintained by the S corp in the same taxable year. Since most SEP plans are established using Form 5305-SEP, this generally means that the S corp cannot maintain a SEP plan and a 401(k) plan in the same year.
If the S corp establishes a 401(k) plan, the amount that each of you can contribute as elective deferrals or Roth contributions is independent of the other.
You and the other person are not "partners" in the S corp but are instead shareholders in the S corp. As shareholders, you are both employees of the S corp. Neither of you is self-employed with respect to the S corp and neither of you can independently make contributions to a self-employed retirement plan based on income from the S corp. Any retirement plan contributions based on income from the S corp would have to be made to a retirement plan established by the S corp, with contributions up to the statutory maximums based on each individuals wages reported on the Form W-2 provided to the individual by the S corp. Any SEP contributions must be the same percentage of compensation for all (both) employees. Employer profit-sharing contributions to a 401(k) plan can be subject to anti-discrimination testing, depending on the type of plan. (Unless the other shareholder is your spouse, a 401(k) plan would not be a solo 401(k) plan.) Since you are employees with respect to the S corp, not self-employed, you do not report on your individual tax returns any deduction for retirement contributions to the retirement plan established under the S corp. The deduction is taken on the S corp's tax return.
Additionally, if the other shareholder has separate self-employment income, that shareholder's separate self-employment business and the S corp might be considered a controlled group for the establishment of any retirement plan, depending on the relative proportion of ownership shares involved. All businesses in a controlled group are considered to be a single employer for the purpose of establishing a retirement plan.
If the SEP plan is established with Form 5305-SEP, no plan other than another SEP plan can be maintained by the S corp in the same taxable year. Since most SEP plans are established using Form 5305-SEP, this generally means that the S corp cannot maintain a SEP plan and a 401(k) plan in the same year.
If the S corp establishes a 401(k) plan, the amount that each of you can contribute as elective deferrals or Roth contributions is independent of the other.
Aren’t 2% shareholders treated as partners when it comes to fringe benefits? IRC section 1372
Perhaps, but it's not relevant in the context of this question. The intent was to differentiate the methods required for making and reporting retirement contributions for shareholders of an S corp (deducted on the S corp's tax return and elective deferrals or Roth contributions reported in box 12 of the shareholder's W-2) from those required for partners in a partnership (reported and deducted on the partner's personal tax return).