FAQ 747: Budget Routine for Sole Proprietorship


Please see the attached case. We have run several budget routines for this sole proprietorship solving for the principal. We've been able to get him to the max but would also like to get his wife to the max as well. We've tried to increase the Profit Sharing contribution amount but it only increases the total slightly and we've input 40k, 50k and 100k as the PS contribution amount.

Can you please review this case and let us know how to get both to the max if possible?


The Budget Routine for a sole proprietorship is designed to prevent contributions being allocated that are greater than necessary to max out at 415 or target a specific benefit to the owner. This is why when entering amounts above the funding determined by the Budget Routine, the allocation to the other staff members is increasing only slightly.

The way to maximize funding for the principal and his wife is to change the Corporation Status in the Plan Specs to a corporation and add the principal's wife as a Principal employee in her employee record. Then calculate the Budget Routine to Maximize Allocation to the Principals.