§415(c) Contribution Limits for DC plans

[Guest JJERS]

Can the §415© contribution limits be applied separately for an individual that participates in two unrelated defined contribution plans? For example, John Doe participates in Corp X's Profit Sharing Plan and Corp Y's 401(k) Plan. Corp X and Corp Y are unrelated entities. Assuming Mr. Doe's salary at Corp X is $50,000 and at Corp Y is $75,000 Y for 2002, can $40,000 be contributed to his account in Corp X's Profit Sharing Plan and another $40,000 be contributed to his account in Corp Y's 401(k) Plan for the 2002 plan year?

[John A]

Yes, the 415 limit is applied separately to plans of unrelated entities.

[AndyH]

True, but, the definition of "unrelated entity" is different for 415. If I recall correctly off the top of my head, the 80% threshold for one of the controlled group definitions, parent/subsidiary I think, is reduced to 50%.

Someone can correct me if that is not precise, but I am certain that there are different aggregation rules for 415 that you need to be careful of.

[Earl]

415(h) 50 Percent Control.

For purposes of applying subsections (B) and © of section 414 to this section, the phrase ``more than 50 percent'' shall be substituted for the phrase ``at least 80 percent'' each place it appears in section 1563(a)(1).

highlighting "more" than 50%

[Belgarath]

AndyH - according to Derrin Watson, who is the deity on these issues as far as I am concerned, you are correct - it does not apply to brother-sister controlled groups, only parent-subsidiary groups (and the parent-subsidiary portion of combined groups.)