I made an 18k contribution to my self employed 401k from my personal funds. My 18k contribution was not on my w-2. How do I properly deduct the 18k?

[vrav]

I also made a 16,250 employer match contribution out of business funds which reduced my k-1 income accordingly.

[Critter]

Are you reporting the business on a Sch C ?   Or are you incorporated ?   

[vrav]

Thank you for your reply. My business is an s-corp and we report on a 1120s / k-1. The contribution does not appear on the k-1

[Critter]

It should have been done thru the payroll system and been reported on correctly on the W-2 ... you are NOT self employed... you are an employee of the corporation.   So did the box 1 of the W-2 reflect the correct amount of wages ?  If not then you need to issue a corrected W-2 to fix not only box 1 but the box 12 entry as well.

And it should not be on the K-1 at all but the company match does reduce the company earnings which in turn reduces the K-1 passthru amounts.

[vrav]

Box 1 is correct wages but box 12 is empty. It is as if the contribution is floating untethered in space. What do I need to do?

[dmertz]

You cannot personally contribute to a solo 401(k) because you are not self-employed.  The S corp must make the deposits and report them on the S corp's tax return.   The elective deferral must be made from wages that would otherwise be shown in box 1 of your W-2 and the elective deferral would then be shown with code D in box 12 of your W-2.  You were required to make your election for the elective deferral by December  31 and the S corp would need to have deposited the elective deferral withheld from your wages, generally by January 15 under Department of Labor regulations.  Depending on the timing, you might be able to reimburse the S corp for the amount of the employer contribution and the S corp might be able to amend it's tax return to report the employer contribution, but the $18,000 that was intended as an elective deferral is probably an excess contribution subject to  penalty.

[Carl]

The owner of an S-Corp can not be "self-employed" by the company they own. You are either:
1) An owner who takes the required yearly distribution which is reported on the K-1.
2) An employee of the S-Corp whose wages are reported on a W-2
3) Both 1 and 2 above.
401(k) contributions can only be made as an employee and the business must be the one handling those contributions through payroll. They are then reported on the employee W-2 in box 12, and the contribution amount is not included in box 1 of the W-2.  The maximum amount of your allowed 401(k) contributions are limited by the "earned" income reported on the W-2. It has nothing to do with the income reported on the K-1.

[Anonymous · Accepted solution]

you probably should consult a tax professional to sort this mess out.  your s corp return is wrong. your w-2 is wrong you probably have an excess contribution subject to penalty.  it could be too late for the corp to make the contribution or it may be subject to penalty.