PS maximum when DB at low 404 limit

[drakecohen]

Husband/wife DB plan 404 limited in 2024 so set up a Profit Sharing plan where they maximized at 25% of pay.

 

W-2 salaries for 2025: $280,000 and $100,000

 

In 2025 DB 404 limit came to $40,000.

 

Would they be able to do the 25% of pay ($95,000) to the PS for 2025 or have to do something less? 

[Bri]

I suppose it depends on whether or not the DB contribution is mandatory or not.  If their MRC is 0 then they could skip DB funding and do the 25% DC.

[drakecohen]

$40,000 is maximum and not mandatory since 430 is much less.

I agree it would be 25% in the PS and nothing in DB but wondering if anyone doing anything different or

if a combination of $40,000 in the DB plus $55,000 as PS would be ok (though I don't see anyone wanting to do that

considering the overfunding issue in the DB).

[Bri]

Well, the 31% limit is going to be 117,800.  The DC portion of that can't go over 95,000.  

If there is a mandatory DB amount that's nonzero, that eats into the 117,800.