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Showing results for tags 'funding & deductibility'.
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Match Question - LLC Taxed as Partnership Owned by 3 S-Corps.
Malcolm posted a topic in 401(k) Plans
The plan sponsor for a law firm 401k plan is set up as an LLC taxed as a partnership - equally owned (1/3) by three different Affiliated/Participating employers all taxed as an S-corp. The LLC employees a few non-owners, and each of the 3 S-corp partners are 100% owners of his or her respective firm. Since the three affiliated, participating employers (S-Corps) pay their owners W-2 compensation, the W-2 compensations are eligible for deferrals and contributions for the plan. For Pre-tax deferral contributions, payroll deductions are withheld for the owners (W-2 comp) and funded by the individual S-corp. It's a Safe Harbor match plan with a Plan Year/annual determination period for the match. Since the pre-tax deferral contribution will be deducted via payroll and funded from the owners' individual S-corp, does the corresponding Safe Harbor match need to also be funded from the individual S-corp. - or does the match need to be funded by the LLC taxed as a partnership? -
Please help me understand the rule for Funding and Deductibility. The October 13, 2015 IRC 415(b) Examining Guidelines states, "Benefits in excess of the IRC 415 limits for any year may not be taken into account in determining the deductible limits under IRC 404 for that year. https://www.irs.gov/irm/part4/irm_04-072-006.html If the calculated Max. contribution is a little over $300,000 and correctly applying the above statement means the deduction is limited to $210,000 for the 2015 plan year. Please include any section of the Code or the Regs. that go over with examples in handling the situation.
