Non-profit Qualified Plan Contributions Maximum

[Guest CNB]

I am raising a question that has been touched upon in previous posts but not directly related. Assume a 501©(3) non-profit, non-governmental organization that brings in good revenue and has never had UBIT or been part of a controlled group with a for profit entity. I am trying to find out if there are any obscure rulings out there that discuss limitations for qualified plan contributions.

Since the 415(e) limit has been repealed, it seems possible to max out a defined contribution plan and a defined benefit plan. It doesn't appear that the deduction limit under 404(a)(7) would apply since we have a tax exempt. It seems that as long as we stay within the 415(b) and 415© limits, we could max out both types of plans.

I am familiar with the Intermediate Sanction rules under 4958. Let's assume for the moment that there is no excess benefit transaction partially because we offer the same benefit to all employees and we are staying within the massive rules under 401(a), et al.

Can anyone come up with some arguments as to why we wouldn't be able to max out a dc plan and a db plan or at least not be worried about the combined 25% limitation?

[Blinky the 3-eyed Fish]

I have seen a DB proposal for credit unions (non-profit entities) to utilize the overfunding technique, but have never researched its correctness. Basically (and this is in the simplest terms and may be forgetting important details), for a credit union they have to have so much in cash reserves earning minimal investment returns. By intentionally overfunding a DB plan, they can count that as part of their assets and invest the money as they see fit.

I don't know if the credit union had an existing DC plan, but at least it's a similar scenario.