Question on SEP for small business with two partners, no employees.
We have set up a SEP plan and will contribute to it for 2018. One partner has a greater percentage in the firm than the other partner. For example's sake: Partner 1 has income of 400k. Partner 2 has income of 800k. 55k (the limit) = 13.75% of Partner 1. Matching the percentage contributed, Partner 2 = 110k but can only really contribute 55,000. Does Partner 2 then collect as additional income from the partnership the additional 55k he was unable to contribute and shield from taxes? Or, does Partner 1 stay at only contributing 6.875% of the 400k which equals the max percentage of the 800k for Partner 2 and therefore can only put 27,500 into SEP?