Partnership 401(k)'s

[austin3515]

Can a partnership with two partners and no employees sponsor a 401(k) Plan?

[rcline46]

Of course, but why? A new comp plan with two groups allows larger contributions!

[Earl]

and complete flexibility

[Blinky the 3-eyed Fish]

Rcline46, I have never seen a 401(k) plan without a profit sharing feature. That being said, the 401(k) plan has the greatest potential for the maximum amounts to be contributed because the 401(k) dollars no longer count against the deduction for plan years beginning in 2002.

[rcline46]

But they DO count for 415, so you still can't get over 40k. The unanswered question is whether a PSP only can allow a catchup contribution!

[Earl]

but for a Partnership does it matter? Couldn't you just determine the contribution and count the first $11,000 as a deferral, fund the catch up and complete with the PS Plan?

[Earl]

......a Partnership with no NHCEs

[Blinky the 3-eyed Fish]

Rcline46, you cannot have a catchup contribution without a 401(k) feature. Also, while the 40k remains the same, if compensation is not sufficient to allow for a 40k deduction, the 401(k) feature is helpful because then you only need a 29K deduction (2002).