25% deductible limit for aggregate testing

[Guest mrsactuary]

I SAW THIS POST ON ANOTHER DISCUSSION FORUM AND NO ONE WAS ABLE TO ANSWER - I'm curious as to what the answer to this would be- can anyone here help?

25% deductible limit for aggregate testing

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I am performing some aggregate testing for a cash balance plan with profit sharing plan. We are hitting the 25% compensation deductible limit. We are doing the testing for the plan year 1/1/2007 – 12/31/2007.

There were some employees who left during the year 2007; they were paid their match on salary deferrals. Since they will not be paid any profit sharing, I am of the opinion that their salary cannot be added into the total salary amount (my associate has added them into the total compensation and hence increased the 25% total compensation deductible limit).

Can anyone help answer or point me to a link that clarifies this

[Kimberly S]

If they are receiving an employer contribution (match) why would you NOT include their salary?

[John Feldt ERPA CPC QPA]

You are probably aware, but just in case this helps: under 404(a)(7), you can ignore the first 6% contributed to the DC plan (of course deferrals are also ignored). So it's really more like a 31% limit (for 2007).