The new $150,000 limit on qualified plan compensation.
The Tax Adviser › Vol. 24 Nbr. 12, December 1993
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Summary
A reduction in the compensation limit for qualified profit-sharing plans from $235,840 to $150,000 beginning in 1994 will affect contribution and benefit calculations and nondiscrimination testing. Possible contributions and corresponding benefit amounts will be reduced. The limits placed on the difference between the contribution percentage for highly paid and for other employees, which are evaluated by the average deferral percentage nondiscrimination test, will also be affected. Planners may wish to consider the use of alternative plans such as age-weighted plans and comparability plans.
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The new $150,000 limit on qualified plan compensation.
Beginning in 1994, the maximum amount of compensation that can be used to compute contributions and benefits for a participant in a qualified plan is reduced to $150,000. This reduction was part of the Revenue Reconciliation Act of 1993, and represents a significant cutback from the 1993 compensation limit ...
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