Employer Contributions to 401(k)/Profit Sharing Limited by Cash Balance Plan

I know that when you are testing both a 401(k)/Profit Sharing Plan and Cash Balance Plan together, the contributions to the Profit Sharing are limited to 6% of eligible compensation.  Does that 6% include any Safe Harbor Match that is made to the 401(k) Plan?  Or does it only apply to the Profit Sharing?

I think I'm confusing myself so I just want to make sure.

Thanks in advance!

If the cash balance plan is not subject to PBGC coverage and if there is at least one employee who is in both plans, then the deduction limit for both plans combined is 25% of eligible compensation, ignoring the first 6% of pay contributed to the defined contribution plan (count all employer contribution types but not salary deferrals).

This combined plan deduction limit is avoided if the sum of all employer contributions to the DC plan (all employer contributions, but not salary deferrals) is not more than 6% of the sum of all eligible compensation.

Slight alteration to what John said, the combined deduction limit for both plans is the greater of 1) 25% of eligible compensation, or 2) the greater of a) the minimum required contribution (determined under IRC Section 430) with respect to the DB plan or b) the excess of the funding target over the plan's assets.  For both 1 & 2 you can ignore the first 6% of pay contributed to the defined contribution plan (count all employer contribution types but not salary deferrals).  

I just wanted to clarify that if the DB contribution exceeded 25% of pay it was still deductible and the sponsor could contribute and deduct an additional 6% into the DC plan. 

Also, the OP asked about "testing both a 401(k) and Cash Balance" together, which I don't think it actually impacted by the 6% rule.  The 6% limit comes in for deductions, not testing.

Yes, of course. Thank you!

On 9/3/2025 at 10:49 AM, Effen said:

Slight alteration to what John said, the combined deduction limit for both plans is the greater of 1) 25% of eligible compensation, or 2) the greater of a) the minimum required contribution (determined under IRC Section 430) with respect to the DB plan or b) the excess of the funding target over the plan's assets.  For both 1 & 2 you can ignore the first 6% of pay contributed to the defined contribution plan (count all employer contribution types but not salary deferrals).  

I just wanted to clarify that if the DB contribution exceeded 25% of pay it was still deductible and the sponsor could contribute and deduct an additional 6% into the DC plan. 

Also, the OP asked about "testing both a 401(k) and Cash Balance" together, which I don't think it actually impacted by the 6% rule.  The 6% limit comes in for deductions, not testing.

Thanks Effen!  One more clarification.

There are participants who are eligible for the 401(k) Plan but not the Cash Balance Plan (they work under 1,000 hours but are getting a Safe Harbor Match).  So for the 6% of eligible compensation that goes into the DC Plan I assume their salaries count, correct?

Yes, as long as they are getting some form of employer contribution, then their wages must count in the limit.