Employer Deduction Limits

The following changes increase the deduction limits for contributions to the plan:

  • Excludes elective deferrals fromthe employer's deduction limit by providing that elective deferrals are no longer considered to be employer contributions for deduction limit purposes.

  • Increases the deduction limit for profit sharing and stock bonus plans to 25% of aggregate employees' pay.

  • Changes the definition of compensation to include elective deferrals.