True or False: The 404(a)(3) deduction limit and the 401(a)(17) dollar limit overlap for deduction calculations.

The statement is true because both the 404(a)(3) and 401(a)(17) limits relate to contributions made to a qualified plan, but they serve different purposes within the tax code.

The 401(a)(17) limit specifically pertains to the maximum amount of compensation that can be considered when determining contributions to a qualified retirement plan. For the year 2023, this limit is $330,000. Any compensation above this amount cannot be included for the purpose of calculating contributions, which can affect how much an employee can have put into the plan.

On the other hand, the 404(a)(3) deduction limit relates to the employer's ability to deduct contributions made to a qualified retirement plan. This limit is capped based on a percentage of the aggregate compensation of all employees participating in the plan.

Given that both limitations focus on the employee's compensation and the employer's contributions, there is an overlap in the sense that the 401(a)(17) cap could restrict the amount of compensation eligible for deduction under the 404(a)(3) rules. Therefore, the implications of limiting deductions can intersect based on compensation considerations, leading to the conclusion that they overlap in their applications.