Jhagan
May 28 1999, 04:48 PM
What is the employer's maximun deductible discretionary profit sharing plan contribution?
- Total eligible compensation $1,000,000
- 401(k) deferrals - $50,000
- Matching contributions - $25,000
Answer $67,500 ?????
DSD
May 28 1999, 07:17 PM
Compensation for deductibility purposes is defined as total eligible comp less salary deferrals. Therefore:
1,000,000 - 50,000 = 950,000
950,000 x 15% = 142,500 maximum deduction for employer
Max PS that can be made is 142,500 - 50,000 - 25,000 = 67,500