DB / DC Plan Dedcution Limit

[Below Ground]

Firm maintains both a DBP and DCP, which cover the same employees. Since the DBP is covered by PBGC the firm can deduct the amount needed to fund the DBP, PLUS 25% of covered pay under the DCP. If, however, the DBP was NOT covered by PBGC then the "25% Limit" would apply.

By 25% Limit I mean that the maximum deductible contribution would be 25% of covered compensation, but not less then the amount needed to fund the DBP. For this computation, we can ignore the 1st 6% of pay that the firm contributes to the DCP.

Did I state that correctly?

[John Feldt ERPA CPC QPA]

Correct, and you can ignore salary deferrals.

[Below Ground]

Thanks!