The maximum deductible contribution is the top of each year's range. Under IRC 404(o), it is the greater of two amounts:
- the funding target, plus the year's normal cost, plus a cushion, less the plan's assets
- the minimum required contribution
It is calculated with unstabilized segment rates, while the minimum uses stabilized ones. For an owner aged 55 with ample pay and long service, the illustrative first-year maximum for 2026 is about $260,000. See the maximum at every age or run the calculator.
Other limits sit on top. A self-employed owner cannot deduct more than their earned income. A 401(k) or SEP funded for the same year brings in the combined deduction limit. Contributions above the deductible amount carry a 10% excise tax (IRC 4972).
Each dollar put in now also leaves less room later. Assets cannot be paid out above the 415(b) limit, and surplus left when a plan ends is taxed as a reversion at 20% or 50%, on top of income tax. See how much you can contribute.