401K for S Corp

[ardi600]

I have a client who contributed 16500 plus the 5500 catch up contributions to his 401K. he Is the 100 percent shareholder in the s corp. his w2 is 90,000 so the s corp's matching contribution for him was 22000. now, the cpa that does his payroll, did not reflect the contribution on his w2. Here is the way I would think I should handle it. Please advise.

His contribution of 16500+5500+=23,000, k1 box 16 as distribution
then, a deduction of 23,000 on his 1040 line 28(self employed sep, simple, and qualified plans)
a deduction for the corporation on 1120s line 17 for 22,000 matching contribution

[Burke]

I really think he needs a corrected W-2, with a code D in 12a. Unless he wrote a check to himself and then deposited it into the 401k account. Then I would do it as you say.

[ardi600]

Thanks for the response Burke. as you said, the right way would be to correct the w-2, but I think I need to take the second option. Would the correct entry on k-1 be on box 16 and the code would be C(nondeductible expense)? I have always done this based on the w2 reflecting the amount, which is much easier.

[Bees Knees]

Thanks for the response Burke. as you said, the right way would be to correct the w-2, but I think I need to take the second option. Would the correct entry on k-1 be on box 16 and the code would be C(nondeductible expense)? I have always done this based on the w2 reflecting the amount, which is much easier.

I would do it the right way and have your client get a corrected W-2. You have until next September 15th for an S-corp extension to have the CPA correct his/her mistake. Why are you in a hurry to fill out an incorrect tax return?

[ardi600]

I just asked his payroll person to correct the w-2. so, after the corrected w-2, the rest should stay the same. the matching contribution by the s-corp goes on line 17 of 1120S, and nothing on line 28 of his 1040 since the deduction for his contribution will be reflected on his w-2.

[Burke]

And the payroll person will do it correctly next year.