Combined Plan - 404(a)(7) Deductibility Limit

[Guest erepper]

Plan a: 401(k) PS Plan

Plan b: DB plan

Plan c: 401(k) deferral only plan

Employee Group 1: All employees IN THIS GROUP are in both plan a and plan b and NOT in plan c

Employee Group 2: All employees IN THIS GROUP are in plan c ONLY (they are all HCE's)

Question: To determine the 25% of payroll, combined deductible limit for the combined Plan a and Plan b, can we include the payroll from Employee Group 2, or are we limited to the payroll for the participants in Employee Group 1 only.

[Tom Poje]

Q and A #19 at the fall 2005 ASPPA Conference

Group A is covered by both PS and DB plan

group B is deferral only 401k.

what is 25% deductibility limit?

Answer- it is limited to 25% of comp of group A. see 404(a)(7)(A)(i)

of course, Q and As carry a caveat that they do not necessarily represent the official position of the IRS.

but this one even cites the Code so I would say it is even more reliable.

good gfrief, this Q and A sounds exactly like what you asked.

are you just checking up on us?