Qualified Plans

Question 1

Characteristics of SS Integration / Permitted Disparity

Answer 1

allocating plan contributions to employee accounts so higher contributions can be made for employees whose comp is > SS Wages (118500) -
* DC (Profit sharing) plans only allow the Excess method
The excess rate is the LESSER of 2x base rate or 5.7%
Typically, it will cap at 5.7%
(DB calcs by adding .75%*amt>118500)
* DB plans can use excess OR offset method
(takes total salary at higher rate and subtracts smaller rate times SS Cap of 118500)
* ends up with the same answer