Search the Community
Showing results for tags 'dc contribution exceeds 6%.. db mrc exceeds 25%.. what is deduction limit?'.
Found 1 result
-
Hello, A plan sponsor has DB and DC plan. Eligible compensation for deduction limit is $500K. 25%=125K, 6%=30K. DC ER contribution is 40K, in order to pass 401a4 (over 6%). DB MRC is 200K as of the valuation date. I am confused what the deposit amount and the deductible amount are. My understanding is... Deposit amount - 240K (DC 40K, DB 200K), Deductible amount = 230K because the DC amount over 6% cannot be deducted?? If the DB deposit is made after the Val Date, would the deductible amount increase accordingly? Am I close or totally off..... Is there a way that a sponsor can deduct full 240K, if the increased DC contribution is due to the failed 401a4 test (I think I read this in one of the posts......but not sure how it works with the actual deduction amount). Thank you in advance.