FAQ 778: Budget--Profit sharing calculation for partners only


The client computes a 3% profit sharing contribution on a pay period basis. There are 3 partners that receive K-1 income and do not have their 3% contribution calculated during the year. Is it possible to input the employee's profit sharing and then have ASC calculate the partner's share accurately? It seems I have to either input everyone, or use the budget routine to calculate everyone, which would result in small discrepencies for the employees.


One way to work around this would be to change the allocation method to a new comp plan and hard-code the non-partners' contributions. I have listed some steps to follow in setting up the plan:

1) Change the Contribution Allocation Method field to "8-Multiple Tiers (New Comparability)" on the source 2 spec screen. Then click on the "Show Parameters" button and change the Group Definitions to "4-User-defined Groups" and the Group #1 section to "Formula". Under Group #1, you will need to enter the contribution dollar amount or the percent of pay for the partners. Click "OK" and save the specs.

2) Change the Principal field on the employees' Name and Identification (NAME) screen to "B-Group B" for all non-partners and "1-Group 1" for the partners.

3) In the Source 2 Contribution section of the Budget Routine setup screen, choose "Formula Contribution Only" so that it will use the amount or percentage that you entered under the "Show Parameters" button. Fill out the screen as you normally would and then click "OK" to run the calculation.