Distinct from an employee’s own 401(k) contribution and match — this finds how much an employer can add as a discretionary profit sharing contribution on top.
How it works
The combined annual-additions limit minus employee deferrals already made gives the remaining room under that overall cap. Comparing that against a separate 25%-of-compensation employer cap — whichever is smaller sets the maximum profit sharing contribution.
What this does not include
This computes the maximum allowed contribution — actual profit sharing plans often use a specific allocation formula (like pro-rata by compensation, or a more complex integrated formula) to determine how a total contribution is split among eligible employees.
How to use this calculator
- Enter employee compensation, the combined 415(c) limit, and employee deferrals already made this year.
Frequently asked questions
What is a profit sharing plan?
A type of defined contribution retirement plan where the employer makes discretionary contributions, often (though not required to be) tied to company profitability, allocated among eligible employees.
Can a profit sharing contribution be made even if the company isn’t profitable?
Yes — despite the name, most profit sharing plans don’t legally require the contribution to be tied to actual profits; it’s simply an employer-discretionary contribution.
Why is there both a combined dollar limit and a percentage-of-compensation cap?
The two limits work together to bound total contributions — the dollar limit caps very high earners, while the percentage cap ensures contributions stay proportionate to compensation for lower earners.
