Great than 2% SH - Considered SE for SEP?

[Unregistered]

If a taxpayer is a greater than 2% shareholder in an S Corp. are they considered self employed for purposes of SEP contribtuions? I thought they were allowed up to 25% of W2 wages, but someone told me that they were considered self employed and allowed 20% of earnings. Who is correct?

[JON]

Someone

was wrong...............

[Bees Knees]

The greater than 2% S corp shareholder is NOT considered self employed. A SEP would have to be set up through the S corp and the contributions are based on 25% of W-2 wages. You can't use K-1 line 1 profits for a SEP contribution.