Max contribution limit of $55,000 with First Year of Fiscal Year Partnership

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Spedward
Posts: 184
Joined: Mon Jun 13, 2011 4:48 pm

Max contribution limit of $55,000 with First Year of Fiscal Year Partnership

Post by Spedward »

All -

In 2019, I will be a W-2 employee for 6-months out of the year - so until 6/30. On 7/1, I will then become a partner in a partnership. The partnership has a fiscal YE of 9/30.

I am trying to figure out the impact on my 2019 contribution limitations (I know it is early, but I would like to figure it out before the beginning of year so I can push as much as I can into my tax deferred accounts as possible).

My question is, effectively my 2019 income will only include the income from W-2 wages (so 1/1 - 6/30) plus 3 months of my partnership income. Then in my 2020 tax year, I will simply receive a K-1 with my share of partnership income from 10/1/2019-9/30/2020.

For purposes of the max contribution amounts to all plans, how will this be determined for the 2019 tax year? Do I have the ability to do the following:
  • Deferred 19K into my 401(k), plus the match, plus another deferred comp plan, from 1/1 - 6/30 and;
  • Defer up to the max between in the next 3 months of the year (7/1-9/30) to reach the 55K limit (once a partner, no longer part of the 401(k) but rather simply have the ability to defer the max limitation - not sure what kind of plan it is.
If I could do the above, I could eliminate much of the taxable income from 7/1-9/30.

Or would the max contribution of 55K be determined by my tax year? Meaning, would I have to take into account how much I deferred from 10/1-12/31 in the initial year even through I will not be recognizing the income until the follow year? Even if I cannot, I will still likely max by 401(k) by 6/30 (which is not what I have historically done). Man, fiscal years are confusing.

I am sure once the first couple of years go by and I just have my K-1 income, it would be pretty straight forward, but the fact that I get 3 months of deferral in the first year is confusing the heck out of me when it comes to the deferral max. Unfortunately they do not provide you access to the people that can answer these types of questions yet, but for someone like me who wants to get as much into tax deferred accounts as possible, I would like to know in advance, so I can plan accordingly come Jan 1.

Thanks,
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