DB DC Combination

[Guest ICannotDiscloseMyIdentity]

A self-employed individual has a net earned income of $100,000 (after subtracting 1/2 SE tax)

Their DB contribution requirement is $90,000.

Can they defer $16,500 into the 401(k) plan, or are they limited to $10,000?

Assume no employer contribution to the DC plan.

[David MacLennan]

$10,000 - because of the 415© limit. Also, makes no difference if there are catch-up deferrals because of 414(v)(2)(A). I believe this is poorly understood and when I last checked a few yrs ago some software vendors don't follow this and allow 401k deferrals when they should not, even in a DC only plan w/o the DB plan complication.

[ScottR]

Their DEDUCTION is limited to $100k. So there would be no point in depositing a "salary deferral" of more than $10k.

.. Scott

[Guest ICannotDiscloseMyIdentity]

Agreed - Thank you!

[David MacLennan]

Scott, conceptually I think you are mistaken. It's not the deduction that is limited. 404n trumps 404a8C. It's the 415 limit that is relevant here.

[ScottR]

Don't think so. 404(n) applies to paragraphs 3, 5, and 7 of 404(a). The limit of deductions for self-employed individuals is contained in 404(a)(8).

.. S

[David MacLennan]

My bad. I had thought 404(n) completely overrode other sections.