G2R Posted April 11, 2018 Report Share Posted April 11, 2018 Hello, I've combed through the IRS publications on retirement plans and I can't seem to get a concrete answer. My client is the sole employee in his Sub-S. He has a solo 401k through that business. He has health insurance that he pays for though the business. Those premiums paid are included in his W-2, box 1 wages. The EMPLOYER match contribution for the solo 401k contribution can be up to 25% of wages. Are the eligible wages, salary wages only, or do they also include the health insurance premiums? As an example: Wages are $50,000 for the year, Health Insurance Premiums are $10,000. Box 1 on the W-2 shows $60,000. Box 3 & 5 show $50,000. Is the company allowed to contribute $12,500 in ER contribution, or $15,000? Or in other words, is it the Box 1 wages, or box 3/5? Thanks! Quote Link to comment Share on other sites More sharing options...
Richcpaman Posted April 11, 2018 Report Share Posted April 11, 2018 My pension Administrators, when calculating the match, take what is box #1, so that would include the HI. Rich 1 Quote Link to comment Share on other sites More sharing options...
jklcpa Posted April 11, 2018 Report Share Posted April 11, 2018 Agree with Rich, in general. Be careful using box 1 straight off the W-2 if there are other types of deferrals like to cafeteria plans though. The technical answer is it may depend on how the plan defines compensation as it relates to code sec 3401. 2 Quote Link to comment Share on other sites More sharing options...
Medlin Software, Dennis Posted April 11, 2018 Report Share Posted April 11, 2018 >2% S Corp insurance is wages, and part of the "remuneration". Also is subject to all taxes and deductions (WC, CS, etc.) unless specifically excluded (such as UI). 4 Quote Link to comment Share on other sites More sharing options...
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