SIMPLE contributions for partnership

[Lion EA]

May I highjack this to ask about a partnership/MMLLC H/W no employees with a SIMPLE?

Edited March 16, 2022 by jklcpa
Moved this to its own topic

[Lion EA]

So, does a partner request withholding his SIMPLE contributions from his draws? Or his guaranteed payments?

[jklcpa]

https://www.irs.gov/retirement-plans/self-employed-individuals-calculating-your-own-retirement-plan-contribution-and-deduction

https://www.irs.gov/retirement-plans/retirement-plan-faqs-regarding-contributions-what-is-a-partners-compensation-for-retirement-plan-purposes

Draws aren't earnings, and guaranteed payments can't be used in isolation because the partnership could have a loss from operations that could offset some of the guar payts and s.e. income would be less than that. You have to follow the formula that starts with self-employment income and then further adjusts for 1/2 of the s.e. tax and the retirement contributions themselves. (Example - That is similar to using the reduced rate of of 20% for a retirement contribution max of 25% because that difference factors in the owner-employee's share.)