Would a partner who is a self-employed individual with "earned income" exceeding $160,000 (for 1999)who is a participant in a qualified 401(k) profit-sharing plan which is integrated with social security be subject to the IRC Sec. 404(a)(3) deduction limit of 15% at both the partnership entity AND individual levels since the partner claims a deduction for the contribution on his individual return? Stated differently, if the plan allocation formula resulted in an allocation to a partner while the total contributions at the entity level were not in excess of 15% of total covered compensation, would each individual partner be limited to 15% of the applicable compensation limit? For purposes of this inquiry, please ignor the special rules requiring a reduction in the partners earned income for the self-employment tax deduction and for the plan contribution deduction.

Hi,
I was just wondering if you ever got an answer because I am facing the same type of situation. My dilemna is that I do not know if the partner's contributions counts towards the entities' 15% deductible limit? Any ideas. Thanks!

Sec. 404 is an Employer level limit. Even though Partner's tax burdon flows through to the indiviidual return, the partnership is still the entity subject to Sec. 404.