Age Weighted Profit Sharing Plans

[Guest MNJudy]

Can an ER put more than $30,000 into an Age Weighted PST? I thought the only way to do that way to go with a defined benefit plan. Thanks for any explanations!

[david rigby]

the maximum dollar contribution to all DC plans of one ER is $30K (that is, the limit for each participant). An age-weighted plan merely defines a technique to allocate a total contribution. It does not increase the limit, not does it alter such other issues as top-heavy status.

[Guest ERead]

The maximum deductiblity depends on the type of DC plan you have in which you utilize the Age Weighted formula. The $30,000.00 limit applies to individual participants as the lessor of 25% or $30K per year.

Hope that helps clarify for you.

[david rigby]

More. In general, you are correct with your original statement that a DB plan can be used to contribute more than $30K for an individual. And the deductibility should not be a problem.

The negative might be (but not necessarily) that the plan sponsor may have to provide more for other EEs than desired. There are some creative ways to deal with this. Much depends on the demographics of the population.