FAQ 204: Allocations--Age-weighted budget allocation for sole proprietor


Please advise how ASC handles this type of allocation and how the specs should be coded. The sole proprietor makes contributions for employees


First - download the Budget2004.pdf documentation from our website.
In general:
Code the Plan Specs ID screen as "Not Incorporated" in the Status field in the lower left corner of the screen.
Code the Source 2 Specs with an allocation of "6-Cost of 1% Pay per Year (Age-Based)".
Code the Owner as "Y" in his or her Principal field and enter their ownership percentage.
Run Calculations/Budget Routines and enter the Budget amount and Source 2 contribution amount.
You will need to use the "guess and check" method to determine the amount of the PS total that will get the owner to their 415 limit without going over. So - enter an amount, e.g. 50k, review the owner's PS, adjust the amount, then run it again. You can usually narrow in on the owner's ideal PS contrib within 4-5 calcs.