2005 Profit Sharing Max

[Guest steve55]

Hi,

I have a long standing profit sharing plan and a separate individual k plan that was established a few years ago. The plans were never merged and 2 separate 5500 ez's are filed every year. I am over age 50 and therefore, eligible for the additional 4k catch-up.

It seems that I can put 25% of my compensation in up to 42k this year in the profit sharing plan and would have to put 4k into the individual k plan to max out at the 46k. Is this correct or can I put the 46k into the profit sharing plan?

I've also read that you may contribute up to 100% of "eligible compensation" to a plan. But I am unclear as to the meaning of "eligible compensation" and the relationship to the 25%. For example, if my wages are 46k, can I put the entire 46k into the profit sharing plan or am I constrained to 25% of 46k to the profit sharing plan and an additional 18k to the 401k?

Thank you for your help.

Steve

[Tom Poje]

mixing apples and oranges!

an individual can receive a maximum of 100% of comp or $42,000.

but the plan itself can only deduct 25% of compensation - so unless there are other employees, then you would never reach the 100% individual limit (I suppose you could make 10,000 defer 7500 and put in 2500 profit sharing - that would be 100% of comp, but 25% deductibility).

The maximum amount of comp is 210,000 for 2005.

deferrals do not count toward the 25% deductibility limit.

if one plan is profit sharing only, you can not have a catch up in that plan, since no deferrals are allowed, and catch ups are deferrals that are reclassified.