404(a)(7) DB/DC deduction limit

[cohendrake]

Client with an ongoing safe-harbor 401(k) plan is considering putting in a Defined Benefit Plan (no PBGC coverage) with expected contributions above 31% of pay. Any 404(a)(7) issues in the first year with the new MAP-21 and PPA rates?

For example, assume two participants in 2014:

Salary 401(k) derral safe harbor match

A $200,000 $23,000 $8,000

B $30,000 $3,000 $1,200

Under the new DB plan for 2014 the MAP-21 minimum required contribuiton would be $75,000 and the PPA maximum would be $100,000.

What would be the maximum allowable combined deduction?

Thanks in advance for all responses.

[Effen]

If you read the Section 404(a)(7)©(iii) of the Code you will see it is not really a "31%" limit. The way it works is if you put in less than 6% of comp into the DC plan, the section does not apply.

In your example, since you are putting in less than 6% of compensation, you don't need to worry about the (a)(7) limit.