Originally Posted by
R1200RT
Your thinking is flawed on many issues.
Why, thank you! I'll skip the matching personal insult and just get straight to the facts.
Originally Posted by
R1200RT
Did you just seriously say that the B-fund bump doesn't get you anything if you’ve already reached “IRS compensation limits”? You clearly don’t understand how the IRS limits work. You get B-fund contributions until you reach the 401(a)(17) limit, which is $265K for both 2015 and 2016.
Yes, I did say something along the lines of, "the B-fund bump doesn't get you anything if you’ve already reached 'IRS compensation limits'.” In fact, that's the exact term I used.
You said, "You get B-fund contributions until you reach the 401(a)(17) limit, ..."
OK, so where do we differ? You see, 26 CFR 1.401(a)(17)-1 is titled "Limitation on annual compensation." Here's how that paragraph begins:
(a) Compensation limit requirement(1) In general. In order to be a qualified plan, a plan must satisfy section 401(a)(17). Section 401(a)(17) provides an annual compensation limit for each employee under a qualified plan. This limit applies to a qualified plan in two ways. First, a plan may not base allocations, in the case of a defined contribution plan ... on compensation in excess of the annual compensation limit.
Furthermore, the $265K you mentioned comes from subparagraph (a)(3)
Annual compensation limit for plan years beginning on or after January 1, 1994 It started there at $150K in 1994, and is adjusted annually by the Commissioner.
We said the same thing. I named the paragraph, you used its number.
Originally Posted by
R1200RT
The limit is indexed to inflation (CPI-U), but wasn’t increased for 2016 since the low level of inflation this year did not meet the legal threshold.
Again, per the regulation, the amount is "adjusted for changes in the cost of living by the Commissioner ... in the same manner as under section 415(d)." 415(d) says nothing about CPI-U.
Originally Posted by
R1200RT
So, even if you make more than $265k (which would mean more than 1000 credit hours per year before the new CBA), you get $2,650 extra for every percent increase in B-fund contribution.
Once you have reached the compensation limit (or, as you like to say, the 401(a)(17) limit), you don't get squat. Some people have already reached that limit. You can raise the B-Plan contribution to 8% today and they won't get squat for the rest of the year. You can raise the B-Plan contribution to 18% today and they won't get squat for the rest of the year. You can raise the B-Plan contribution to 80% today, right now, effective immediately, and they will not get squat for the rest of the year.
Was I more clear that time?
Originally Posted by
R1200RT
There are other limits in play, 415(c), but you’d have to have around a 20% b-fund before those limits would kick in. Also, all of those limits could be mitigated if we had cash over the cap provisions.
And if I had ... oh, nevermind.
.