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March 26, 2021

Compensation Cap



The compensation cap is the maximum amount of compensation that may be taken into consideration when determining contributions  to employer sponsored retirement plans,  such as SEP IRAs, SIMPLE IRAs, 403(b) arrangements, qualified plans-such as 401(k)-profit sharing and pension plans..

Referring Cite

IRC § 401(a)(17), IRC § 404(l)

Additional Helpful Information

The compensation cap does not apply to SIMPLE IRA matching contributions.


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Qualified Charitable Distribution (QCD)

Definition A distribution that is excludable from the distributee’s income, as a result of meeting the following requirements: It is made after the distributee reaches

Saver’s Credit

Definition Also known as the Saver’s Tax Credit: Nonrefundable tax credit available to eligible individuals who make contributions to their retirement account. The saver’s credit

Catch-up Contribution

Definition An additional contribution that can be made to a retirement plan by a participant who is at least age-50 by the end of the

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IRA Rules