Maximum employer contribution limit

[Guest Peggy806]

An employer has contributed more than the 25% deductible limit for 2010. The contribution was made in 2011, so they can use the excess toward their 2011 safe harbor liability.

My question is: Does the 25% limit apply to deductibility only? Are they allowed to contribute more than 25%, even if they don't deduct the excess?

I know it would be crazy to contribute more than you can deduct, but is it allowed? Everywhere I look just refers to the 25% limit as the maximum an employer can deduct.

thanks

[SheilaD]

An employer has contributed more than the 25% deductible limit for 2010. The contribution was made in 2011, so they can use the excess toward their 2011 safe harbor liability.

My question is: Does the 25% limit apply to deductibility only? Are they allowed to contribute more than 25%, even if they don't deduct the excess?

I know it would be crazy to contribute more than you can deduct, but is it allowed? Everywhere I look just refers to the 25% limit as the maximum an employer can deduct.

thanks

There is a penalty tax on non-deductible contributions to a qualified plan.