Jump to content

max ER contribution?


Recommended Posts

Is there a maximum percent of eligible pay that the NFP has to stay below?  In the for-profit world, they have to stay below 25% to keep the contribution deductible... but there's no deduction issue for a non-profit.  Whether or not a NFP should be spending 30% of payroll on a plan contribution is another question altogether, but if they had the cash, is there anything stopping it?  I'm sure there is, but I haven't found it yet.  Thanks.

Link to comment
Share on other sites

I don't think so. Years ago, back when the PS deduction limit was 15%, I did RK for the large/audited PS 401k of a very generous NFP that easily exceeded that threshold every year without issue. Total compensation and benefits still need to be reasonable but there's no hard coded limit of which I'm aware.

Kenneth M. Prell, CEBS, ERPA

Vice President, BPAS Actuarial & Pension Services

kprell@bpas.com

Link to comment
Share on other sites

Agreed, a tax exempt employer or government employer is not subject to the excise tax [IRC Section 4972(d)(1)(B)].  Because of this a tax exempt employer could exceed the IRC Section 404(a)(3) deductible limit for Profit Sharing Plans without having the excise tax imposed.  However, the applicable dollar limits under IRC Section 415(c) must not be exceeded.

Link to comment
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
 Share

×
×
  • Create New...