Qualified Retirement Plan
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Types of Plans
401k Plans
Contributions to individual employees are limited as follows:
  • 401(k) salary deferrals are limited to $18,000 for the 2016 calendar year. For those age 50 or older the limit is $24,000 which includes a $6,000 employee 401(k) catch-up.
  • Total contributions (profit sharing, 401(k) deferrals, match, and forfeitures) are limited to the lessor of:
    1. $53,000 ($59,000 with catch-up) or
    2. 100% of compensation
For example:

Gross compensation$100,000
x 100%
lesser of % or $ limit 53,000
less 401(k) deferrals (18,000)
Maximum profit sharing/match/forfeiture allocation  $35,000

401(k) Profit Sharing plan limits

Total employer contributions (profit sharing and match) to the plan cannot exceed 25% of total eligible compensation for the employer.
401(k) deferrals are not taken into account for determining the deduction limit.

For example:

Gross compensation* of all eligible employees  $ 1,000,000
less 401(k) deferralsn/a
less cafeteria elective contribution n/a
Net compensation1,000,000
Maximum Deductible contribution 250,000
less 401(k) deferralsn/a
Maximum profit sharing/match contribution$250,000

* only compensation up to $265,000 for 2016 may be taken into account for any individual employee for retirement plan purposes.

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