3937 / How is an employer’s deduction limited for qualified plan contributions?

The amount of an employer’s deduction for contributions to a qualified plan depends on the type of plan being maintained. The maximum amounts an employer may deduct are explained at Q 3735 for pension plans, Q 3750 for profit sharing or stock bonus plans, and Q 3824 for employee stock ownership plans (“ESOPs”). If an employer contributes to two or more plans covering any common participants, it is subject to the limits explained in Q 3942.

Rules that govern the timing of an employer’s deduction are explained at Q 3939. Other more specific requirements that may affect an employer’s ability to deduct contributions or plan expenses are explained at Q 3940.

Special rules governing contributions of property are explained at Q 3938.The 10 percent penalty on nondeductible contributions is explained at Q 3943.