Contribution exceeding base formula

[Guest EBC]

I have a plan that provides allocation for the owners for 13.25% of comp contribution and 4% for all others. The plan also allows 4k but has low participation. The employer would like to put in the maximum 15% contribution. Due to the low 4k participation, the 15% will exceed the formula described above. Is their any guidance for contributions exceeding the base formula? I could not find anything in the document.

[Tom Poje]

not sure what you are asking.

it sounds like you have a 401k profit sharing plan with the following classes:

1. owners at 13.25% (assuing the kids dont work there)

2. rank and file at 4%

does the document say these %s are pro rated depending on how much the contribution is? if not, you are locked into the formula - almost like a money purchase.

If plan has a last day requirement, I would amend to simply a class plan with no %s listed.

next year you have to give more than 4% anyway, since you are stuck with 1/3 the HCE rate.

If you exceed the 15% deduction limit you are stuck paying the nondeductible penalty.