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Posted

I was just reading something and came across a note I had never seen before.  Is it true that if the Plan is covered by the PBGC, the 6% limit on employer contributions into the Profit Sharing Plan doesn't apply?

We always adhered to the 6% rule, even for PBGC Plans, but what I read seemed to imply that it wasn't the case.  So I just wanted to make sure I was reading this right.

Thanks in advance

Posted

That's correct. The combined deduction limit doesn't apply if the DB plan is covered by PBGC. IRC 404(a)(7)(C)(iv)

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

Posted
12 minutes ago, C. B. Zeller said:

That's correct. The combined deduction limit doesn't apply if the DB plan is covered by PBGC. IRC 404(a)(7)(C)(iv)

Great, thank you!  Is there any limit?  Or they can go as high as they want to?

Posted

Just the usual 25% limit.

Free advice is worth what you paid for it. Do not rely on the information provided in this post for any purpose, including (but not limited to): tax planning, compliance with ERISA or the IRC, investing or other forms of fortune-telling, bird identification, relationship advice, or spiritual guidance.

Corey B. Zeller, MSEA, CPC, QPA, QKA
Preferred Pension Planning Corp.
corey@pppc.co

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