MULTIPLE PLAN: EXAMPLE 1
01.Core Concepts
Lori’s Law Practice (LLP) operates a defined benefit plan and a defined contribution plan for their 12 employees. The annual covered compensation for LLP is $1,000,000. The actuary has determined that a contribution of $120,000 must be made to the defined benefit plan. In this case, LLP can make a tax-deductible profit-sharing plan contribution on behalf of its employees up to $130,000 (($1,000,000 x 25%) minus $120,000) for the current year.