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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10146
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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What is the maximum that can be contributed to a 401(k) plan

Customer Question

What is the maximum that can be contributed to a 401(k) plan and profit sharing plan combined for a 24 year od taxpayer earning $81,000.00 per year
Submitted: 12 months ago.
Category: Tax
Expert:  Lane replied 12 months ago.

Hi,

...

Maximum Profit Sharing Contribution

$20,250.00

Maximum 401(k) Contribution

$18,000.00

...

This assumes C-Corp or S-Corp

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Maximum Profit Sharing Contribution

$15,055.51

Maximum 401(k) Contribution

$18,000.00

...

This assumes self employed (Sole Prop, Partner, LLC not taxed as a corporation)

...

let me know if you have questions

...

Lane

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Customer: replied 12 months ago.

Taxpayer is an employee (W-2) at a partnership. Which scenario applies

Expert:  Lane replied 12 months ago.

Actually neither ... because the profit sharing in that scenario (sorry we get almost ALWAYS questions from the business owner) ...would be limited by the non-discrimination rules ... that so many times drive by what's done for all employees

....

But if you're looking for for the maximum POSSIBLE, it will be the former (the first one), although in the real-world not the most common.

...

The reason the Self-employed person's is limited is the rules limit contributions to a basis of net self employment income ... where in the other it's simply 25% of salary ... but again profit sharing contributions for employees are not required every year AND when done, will have to pass the non-discrimination tests

Expert:  Lane replied 12 months ago.

Other questions? .. Maybe if you can tell me about the context here (thought more should have been done, etc) I can help.

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Qualified plans is what I do ... Other than the law degree, that CRPS stands or Chartered Retirement Plans Specialist

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I may be able to help

Expert:  Lane replied 12 months ago.

OK ... hope this has helped.

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If this HAS helped, (and you don't have any other questions onthis), I'd really appreciate a positive rating(using those stars on your screen) … That's the only way I'll be credited with a portion of what you've paid JustAnswer.com

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Thank you,

Lane

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