For a self‑employed individual or a partner in a partnership, compensation is equal to earned income from your company. For a sole proprietor, these amounts will be reported on Schedule C of your Form 1040. If you are a partner in a partnership, this amount will be reported on Schedule K-1 (Form 1065) of your Form 1040.
Please note that if you are an S-Corp owner, your K-1 income does not factor into your compensation and only your W-2 wages are included. If you are a C-corp owner, your only compensation is your W-2 employee compensation.
If you have questions about your individual circumstances you should always consult your tax advisor. To learn more about compensation in your 401(k) plan, you can review your summary plan description (SPD), located in your Guideline dashboard as well.
Compliance refund deadlines are March 15 for Automatic Contribution Arrangement (ACA) Plans and June 30 for Eligible Automatic Contribution Arrangement (EACA) Plans, regardless of your company’s tax filing deadline. If your owner income will not be finalized before these compliance deadlines, you can provide an estimated amount for compliance testing calculations.
Once you know your finalized owner income, please update this in the Employee Roster. These updates may change your compliance testing results and you may owe a 10% late penalty if required compliance refunds are not processed by these deadlines.