? SpiritRider to the rescue (husband/wife DBP/PS complexities)

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? SpiritRider to the rescue (husband/wife DBP/PS complexities)

Post by scarabrad » Tue Nov 21, 2017 6:29 pm

Hi folks,

Long time lurker and amazed at the wealth of information provided here. Have a quick question for the gurus on this forum, particularly SpiritRider (your insight and knowledge has been invaluable and most impressive).

I have a DBP that is funded to support my 3 year average and that of my spouse who is employed by me (acting as a sole proprietor) to help me with my consulting business. She does significant high value work for me that justifies her roughly $45000 salary.

In addition to the DBP contribution as set forth by the actuary, we are allowed a 6% profit sharing contribution. Because I am covered by a 403b at work, my total contributions to the 403b and solo-401k (the profit sharing plan) are limited to a combined 54k (adroitly but disappointingly brought to my attention by SpiritRider). My wife has a solo-401k as well, to which she has contributed the maximum $18k.

Let's say for argument's sake that I have net profit of 300,000 after expenses, SE taxes and DBP contributions. Theoretically, I could put $18k into the profit sharing plan. However, because of my 403b contributions (employee and employer), I might only be able to make $5000 in contributions on my behalf, leaving $13k to allocate. Can I allocate all of that to my wife's solo-401k (again accounting for her $45k salary) or can I only make a 6% contribution based on her salary (and would this be pre or post employee solo-401k contributions)???

In years when I do not have a DBP contribution to make (possibly next year due to the plan already being funded near max), am I entitled to the usual 20 or 25% funding of the PS plan (limited on my behalf to the combined 55k limit of the 403b and solo-401k contributions) and can I allocate the remaining PS contribution to my wife (ie, if I make 300,000 net schedule C profit and theoretically could contribute 50,000 to PS but can only contribute 5,000 on my behalf due to retirement plan contributions at work, can I allocate the remainder to my wife's solo-401k, at least up to her salary, or is she limited to 25% contribution).

I have exhausted all attempts to answer this question through my own independent review and was wondering if anyone had an opinion on this.

Sorry if this seems like a complex situation. Feel free to ask for further clarification.

Thank you in advance for any advice you can offer.


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