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The amount such employer is required to contribute to such trust under section 401 (k) (11) for such year. For purposes of this section, any contribution by an employer to a simplified employee pension plan for an individual for a taxable year shall be treated as an employer contribution to a defined contribution plan for such individual for such year. The employer contribution deduction limit is the allowable deduction for employer contributions to a 401 (k) plan in a single taxable year
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In general, this limit is set to 25% of total compensation for all employees eligible to participate. Refer to publication 560, retirement plans for small business (sep, simple, and qualified plans) pdf, for more information about deduction limitations. To calculate the compensation limit for the 25% employer contribution, you need to start with box 1 wages of $70,000
In this case, the $30,000 401 (k) deferral is added back.
Discover the 401 (k) contribution limits for employees and employers Employer contributions are deductible on the employer’s federal income tax return to the extent that the contributions do not exceed the limitations described in section 404 of the internal revenue code
