Bill writes:I agree on the 100% of pay deal, but someone earning a substantial income can defer the full 12k, receive 25% employer contribution (those 2 amounts cannot exceed 40k)(Thus your CFP training is correct when iot states the 415 limit is 40k.) Then do an additional 2k catch up.OK, you and Buzman forced me to reread my copy of the proposed IRS Reg 142499-01 that deals with this issue. Here are some pertinent quotes:The legislative history to section 631 of EGTRRA indicates that the intent of Congress in enacting section 414(v) was to allow a catch-up eligible participant to make additional elective deferrals over and above any otherwise applicable limit, up to the catch-up contribution limit for the taxable year. The proposed regulations would provide that elective deferrals made by a catch-up eligible participant are treated as catch-up contributions if they exceed any otherwise applicable limit, to the extent they do not exceed the maximum dollar amount of catch-up contributions permitted under section 414(v). (Emphasis added.)Under the proposed regulations, catch-up contributions would not be taken into account in applying the limits of section 401(a)(30), 401(k)(11), 402(h), 402A(c)(2), 403(b), 404(h), 408(k), 408(p), 415, or 457 toother contributions or benefits under the plan offering catch-up contributions or under any other plan of the employer.Catch-up contributions shall not be taken into account in applying the limits of section 401(a)(30), 401(k)(11), 402(h), 402A(c)(2), 403(b), 404(h), 408(k), 408(p), 415, or 457 to other contributions or benefits under an applicable employer plan or any other plan of the employer. (Emphasis added.)Examples. The following examples illustrate the application ofthis section. For purposes of these examples, the limit undersection 401(a)(30) is $15,000 and the applicable dollar catch-uplimit is $5,000 and, except as specifically provided, the plan yearis the calendar year. In addition, it is assumed that theparticipant's elective deferrals under all plans of the employer donot exceed the participant's section 415(c)(3) compensation... (Emphasis added.)Given all the above, I now believe Bill is absolutely correct. While no example specifically addresses the $40K contribution cap issue, 415(c)(3) compensation means the compensation received by the participant from the employer for the year. Thus, it appears 100% of compensation is the upper contribution limit of all contributions combined. And because "catch-up contributions shall not be taken into account in applying the limits" of section 415, it seems to me that a $42K contribution this year is therefore possible.Besides, would Vanguard or the Society of Actuaries be wrong? :-)Regards...Pixy
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