Non-Profit Org 401(k) contribution limit

[Guest kaybe]

Non-profit organization has a 401(k). There are no HCEs. Is the contribution limited to 25% of comp or 15% of comp? Thanks.

[LCARUSI]

First of all, an employee's maximum contribution rate might be contained in the Plan document - so that's the first place to look.

With respect to statutory limits:

1) Each participant is subject to the 415 limit (lesser of 25% of Compensation and $30,000)

2) Since the organization is tax exempt, it should not be concerned with the maximum tax deductible limit of 15% of eleigible compensation (computed on an aggregate basis)

[This message has been edited by LCARUSI (edited 06-22-99).]

[Guest JPCMPLS]

My understanding is that if the non-profit has UBTI or a for profit subsidiary participating in the plan, the Section 404 limit (15%) may come in to play. Otherwise, the Section 415 25% of pay and 402(g) $10,000 annual limits on voluntary contributions are what apply. Check the prototype for other design based limits, however.

[M R Bernardin]

What if the nonprofit has UBTI?

[Guest LBBarr]

It appears that the current position of the IRS is that the Section 4972 excise tax for nondeductible contributions applies to a tax exempt employer that had UBTI at any point in time even if not in the current tax year. Also if there is a 403(B) or eligible 457 plan be careful to monitor deferrals under all plans for the 457© $7500 limit on excess deferrals i.e., the amounts may be agregated for 457 purposes.