Using 401k deferrals in compensation

[dan.jock]

I understand that as long as the document allows, deferrals are part of DB compensation. Say a person makes 24,000 including catch-up in 401k deferrals and the DB annuity factor is 13. If the sole prop income after FICA is 51,200, then the person could have a DB benefit of 24,000 * 10% * 13 = 31,200, loosely, and deduct his entire net income.

Am I off base here on deferrals?

[SoCalActuary]

If you reduce the net income down to 24k, then you must compute the DB benefit using only that amount. You still pay FICA on the full amount. Also, be prepared for IRS audit if your pension deduction in line 28 of 1040 is near the net business income of line 12.

But it looks defensible.

[Mike Preston]

Audit? Seriously? I have done 100's of calculations that deduct everything (or almost everything) and never felt that any of the audits through the years are disproportional.

To the OP: isn't 24k + 31.5k greater than 51.2k?