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Contributions to individual employees are limited as follows:
- 401(k) salary deferrals are limited to $15,500 (for 2008) per calendar year. For those age 50 or older the 401(k) limit is $20,500 ($5,000 catch-up for 2008).
- Total contributions (profit sharing, 401(k) deferrals, match, and forfeitures) are limited to the lessor of:
- $46,000 ($51,000 with catch-up) or
- 100% of compensation
For example:
|
Gross compensation | $100,000 |
| x 100% |
 |
| lesser of % or $ limit | 46,000 |
|
| less 401(k) deferrals | (15,500) |
|
| Maximum profit sharing/match/forfeiture allocation | $30,500 |
|
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) deferrals | n/a |
|
| less cafeteria deferrals | n/a |
|
| Net compensation | 1,000,000 |
| 25% |
|
| Maximum Deductible contribution | 250,000 |
|
| less 401(k) deferrals | n/a |
|
| Maximum profit sharing/match contribution | $250,000 |
|
* only compensation up to $230,000 (for 2008) may be taken into account for any individual employee for retirement plan purposes.
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