What is a restriction on using more than one qualified retirement plan?

When an employer sponsors both defined benefit and defined contribution plans, there are specific restrictions in place to ensure that contributions and deductions align with regulatory standards. In this context, the limitation on total deductions is particularly important.

The correct answer highlights that the total deductions an employer can take for contributions to these plans cannot exceed the minimum funding requirements established for the defined benefit plan. This regulation exists because defined benefit plans are required to be funded adequately to meet future obligations owed to retirees. By tying the contribution limits to the minimum funding requirements, this rule encourages proper funding of the defined benefit plan while also allowing for contributions to defined contribution plans.

In contrast, options that suggest combined contribution limits, mandatory service requirements, or restrictions on simultaneous participation do not accurately reflect the regulations governing qualified retirement plans. Each plan type has distinct rules, but they can coexist within certain regulatory frameworks, especially when adhering to overall funding requirements.