non-profit entity - "maximum" contribution

[Effen]

Is there anything that would restrict the amount of contribution that a "non-profit" employer can contribute?

For example, lets say I have a nonprofit that made lots of money. The min/max (if taxable) is $100K. The entity wants to put in $600K. Is this a problem?

If they don't pay taxes, do they owe any excise taxes?

[Mike Preston]

As long as it is truly a "non-profit" they should be fine. However, note that the issue here is whether the entity is exempt from the excise tax on making contributions which exceed the calculated maximum deductible contribution. The IRS has opined in the past that to be exempt a non-profit had to meet, IIRC, the following two criteria:

1) They must *always* have been a non-profit

2) They must not *ever* have been subject to UBTI.

There may even be more criteria. In any event, the issue isn't as simple as it seems at first blush.

[david rigby]

The concept of "maximum" is usually related to the term "deductible". A non-profit does not have deductions.

However, there may be other constraints. For example, the non-profit might have a for-profit subsidiary.

[Belgarath]

Don't 415 limits still apply? Can't the plan still be disqualified? I don't pretend to know the tax ramifications with a non-profit, but this would presumably then all be income to the individuals - can the IRS assess penalties for the whole arrangement as a scam? Although the "non-profit" itself hasn't avoided taxes, apparently, could the individual(s) directing this transaction potentially be in hot water for some form of tax avoidance?

Just thinking out loud - I don't know anything about the down side to a non-profit doing this, but it seems unlikely that one could totally flout all restrictions to normal contribution levels with complete impunity.

[Mike Preston]

I don't think the concepts you are mentioning apply in the context of a DB plan.

I believe there is a case out there somewhere which held that a plan sponsor that dumped a whole lot of money into a plan in excess of the total liabilities of the plan was held to violate the exclusive benefit rule. Maybe something like total liabilities of $150,000 but they put in over $2,000,000. It is a very distant and hazy memory.

But if the purpose of the funding is to shore up an otherwise underfunded plan or to create a somewhat overfunded plan I can't see the IRS being concerned. Assets to liabilities of nearly 15 to 1 though might be an issue.