FAQ 220: Budget--Age-based profit sharing budget routine


I'm attempting to run an age-based profit sharing contribution using the Budget Routine. I have one person coded as a principal. When I'm running the allocation, I can only get the allocation to maximize the contribution for the principal resulting in a $500,000+ total allocation. The employer doesn't want to contribute that much. Is it possible to say I want to allocate $18,000 among those eligible to share in the contribution?


In this scenario, assuming it is a corporation, you could just enter $18,000 in the source 2 specs under the "Show Total Contrb." button and then run the normal valuation calculations. The "budget" design is not necessary. If, for some reason, you want to run the budget routine, you would need to use a "guess and check" method, altering the principal's requested allocation until you get a total of $18,000. It shouldn't be hard with an age weighted plan as it should be a straight interpolation. If this is a partnership/sole prop, you should have a field in the Budget Routine setup screen that allows you to input a Source 2 contribution of $18,000. If this field is disabled, it is because there is already a formula coded under the "Show Total Contrb." button in the Source 2 specs.