Partnership and Guaranteed Payments

Payments made by a partnership for a partner's health insurance are not treated as a guaranteed payment but are treated as a reduction in distributions to the partner (Rev. Rul. 91-26). That works out well because if it were treated as a guaranteed payment, it would reduce the amount of QBI.

How are payments to a partnership 401(k) plan treated....as a reduction in partner distribution as well or as a guaranteed payment?

Health insurance payments are treated as GPs if they are made without regard to partnership income.
This is the case with almost all my clients, which makes them all GPs.

401k contributions are not GPs.

https://bradfordtaxinstitute.com/Endnotes/Rev_Rul_91-26.pdf

A partnership may account for accident and health insurance premiums paid on behalf of a partner as a reduction in distributions to the partner. Under these circumstances, the premiums are not deductible by the partnership, so distributive shares of partnership income and deduction (and other payment items) are not affected by payment of the premiums. A partner may deduct the cost of the premiums paid on that partner's behalf to the extent allowed under section 162 (1).

I think the "HOLDINGS" section of RR 91-26 is more meaningful:

Accident and health insurance premiums paid by a partnership on behalf of a partner are guaranteed payments under section 707 (c) of the Code if the premiums are paid for services rendered in the capacity of partner and to the extent the premiums are determined without regard to partnership income. As guaranteed payments, the premiums are deductible by the partnership under section 162 (subject to the capitalization rules of section 263) and includible in the recipient-partner's gross income under section 61. The premiums are not excludible from the recipient-partner's gross income under section 106; however, provided all the requirements of section 162 (1) are met, the partner may deduct the cost of the premiums to the extent provided by section 162 (1).
A partnership must report the cost of accident and health insurance premiums that are guaranteed payments on its U.S. Partnership Return of Income (Form 1065) and the Schedule K-1. A partnership is not required to file a Form 1099 or a Wage and Tax Statement (Form W-2) for accident and health insurance premiums that are guaranteed payments.

So what is the point of stating in the "LAW AND ANALYSIS" section that a partnership could use a different treatment, then go on to not include that option in the "HOLDINGS"

The excerpt in #3 does not include this, which makes all the difference:

... if the premiums are paid for services rendered in the capacity of partner and to the extent the premiums are determined without regard to partnership income.

So what is the point of stating in the "LAW AND ANALYSIS" section that a partnership could use a different treatment, then go on to not include that option in the "HOLDINGS"

This conclusion/holding is qualified by "if the premiums are paid for services rendered in the capacity of partner and to the extent the premiums are determined without regard to partnership income". This characterizes a good number of my clients, but not all.

*posted at the same time as Len*

I definitely read it as if it was an option. So if health insurance payments are contingent on the income of the partnership, then and only then they would be considered a reduction in distributions? And that would also mean that they absolutely could not be GP?

They just have to meet the definition in 707(c):

(c) Guaranteed payments
To the extent determined without regard to the income of the partnership, payments to a partner for services or the use of capital shall be considered as made to one who is not a member of the partnership, ...

401k contributions are not GPs.

So you're saying a partner's contributions to their 401k group plan goes to their distributive share (i.e., capital draw account) and then gets deducted on the partner's 1040??? I like it but can you point me to guidance that supports it in case I get attacked on that position?