Funding Profit Sharing contribution with excess assets transferred from a terminated DB plan

msmith · September 29, 2023

This is just a Profit Sharing plan - Sole-Proprietor (only participant), with Schedule C net profit of $105,533. After reductions, compensation used for PS purposes is $98,077.33. If we wanted to fund 100% of compensation, do we have to worry about deductibility?

John Feldt ERPA CPC QPA · September 30, 2023

The allocation of the excess DB plan assets that were transferred into the plan are not subject to the deduction limit. They will be limited by the lesser of the annual addition limit ($66,000 in 2023) or net earnings from self-employment.

msmith · October 2, 2023

Thank you, John. That was my thought. But great to have confirmation.

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Funding Profit Sharing contribution with excess assets transferred from a terminated DB plan

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