Under PPA 2006 for the 2006 plan year. Plan has 2 participants.
My understanding for a single employer DB plan is that the 404 limit is u p to 150% of current liability.
My understanding for a DB plan and a stand alone 401k plan (no matches, etc.) is that the 150% current liability still applies.
My understanding for a combined profit sharing, DB plan situation, the combined plan DB limit is the minimum up to 100% current liability (if greater than 25% of pay) and that a profit sharing contributes 8% of pay, subjects 2% of pay to an excise tax for 2006.
Now here is where things get a little dicey for me.
If we have a combined profit sharing, DB plan situation, and between 1% and 6% is contributed to the profit sharing plan then is the plan DB limit:
the greater of minimum or 100% CL (assume greater than 25%) or
since profit sharing contribution does not exceed 6% is the combined DB plan limit ignored and the single employer limit of 150% of CL applicable?
Thanks.
Full Version: Combined Plan Deduction Limits
Sorry, I don't think so.
Check out this post:
http://benefitslink.com/boards/index.php?s...=35028&st=0
Check out this post:
http://benefitslink.com/boards/index.php?s...=35028&st=0
This particular issue was clarified by IRS Notice 2007-28 Q&A 9 which provides that the 100% rather than the 150% CL limit applies.
QUOTE (Gary @ May 14 2007, 04:50 PM) 
Under PPA 2006 for the 2006 plan year. Plan has 2 participants.
My understanding for a single employer DB plan is that the 404 limit is u p to 150% of current liability.
My understanding for a DB plan and a stand alone 401k plan (no matches, etc.) is that the 150% current liability still applies.
My understanding for a combined profit sharing, DB plan situation, the combined plan DB limit is the minimum up to 100% current liability (if greater than 25% of pay) and that a profit sharing contributes 8% of pay, subjects 2% of pay to an excise tax for 2006.
Now here is where things get a little dicey for me.
If we have a combined profit sharing, DB plan situation, and between 1% and 6% is contributed to the profit sharing plan then is the plan DB limit:
the greater of minimum or 100% CL (assume greater than 25%) or
since profit sharing contribution does not exceed 6% is the combined DB plan limit ignored and the single employer limit of 150% of CL applicable?
Thanks.
My understanding for a single employer DB plan is that the 404 limit is u p to 150% of current liability.
My understanding for a DB plan and a stand alone 401k plan (no matches, etc.) is that the 150% current liability still applies.
My understanding for a combined profit sharing, DB plan situation, the combined plan DB limit is the minimum up to 100% current liability (if greater than 25% of pay) and that a profit sharing contributes 8% of pay, subjects 2% of pay to an excise tax for 2006.
Now here is where things get a little dicey for me.
If we have a combined profit sharing, DB plan situation, and between 1% and 6% is contributed to the profit sharing plan then is the plan DB limit:
the greater of minimum or 100% CL (assume greater than 25%) or
since profit sharing contribution does not exceed 6% is the combined DB plan limit ignored and the single employer limit of 150% of CL applicable?
Thanks.
Yes, I am aware of Q-9.
In one sentence it says "When employer contributions do not exceed 6% ..., the combined limit of 404a7 does not apply to employer DC contributions"
So in playing devil's advocate if 404a7 does not apply perhaps we revert to single employer limit.
Maybe....
I certainly see your point that the limit is probably 100% CL.
To take a step back are we in agreement that if only 401k deferrals are made to a DC plan then the DB limit is the 150% limit?
So the thought was that perhaps paying less than 6% to DC swas analagous to 401k deferral only plan.
Thanks.
In one sentence it says "When employer contributions do not exceed 6% ..., the combined limit of 404a7 does not apply to employer DC contributions"
So in playing devil's advocate if 404a7 does not apply perhaps we revert to single employer limit.
Maybe....
I certainly see your point that the limit is probably 100% CL.
To take a step back are we in agreement that if only 401k deferrals are made to a DC plan then the DB limit is the 150% limit?
So the thought was that perhaps paying less than 6% to DC swas analagous to 401k deferral only plan.
Thanks.
BTW, in case you were not aware, the Academy sent this letter to IRS w/r/t Notice 2007-28:
http://www.actuary.org/pdf/pension/irs_0328.pdf
http://www.actuary.org/pdf/pension/irs_0328.pdf
QUOTE (pax @ May 14 2007, 06:12 PM)
BTW, in case you were not aware, the Academy sent this letter to IRS w/r/t Notice 2007-28:
http://www.actuary.org/pdf/pension/irs_0328.pdf
http://www.actuary.org/pdf/pension/irs_0328.pdf
ASPPA sent a letter to IRS yesterday and is posted to the website.
Kudos to ak2ary for working on that letter. Whoever helped to get ahold of Allen's comments to Grassley - again, great work!
http://www.asppa.org/pdf_files/0514_2007-27NoticeFIN.pdf
http://www.asppa.org/pdf_files/0514_2007-27NoticeFIN.pdf
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