My wife's employer has told her that they will only allow her to put 10% into her 401k.  I believe they match 4%, but this doesn't let her reach the limit each year.

They told her it is due to profit sharing contributions or some such activity.

She is working on getting the policy in writing, but as of now I don't know/have all the details.

Is this a common thing?

What are our options for further investment?  We do not qualify for the Roth IRA.

Company plans are different from one company to another.  They (have someone) write it and submit it for approval by the .gov.  And of course the .gov is concerned with ensuring the plan is fair.

It is common for a combination of salary and company compensation limits to prevent one from reaching the federal limit of $18,000.

If your combined income exceeds the limits for Roths and deductible IRAs you can make non-deductible IRA contributions.

The standard answer from ARFOM financial "experts" is typically "back door Roth" whereby you make a non-deductible IRA and then do a Roth conversion (whereby the amount converted is taxed as income) and voila, a Roth when you technically weren't eligible to do so...however, if you have any other existing IRAs, the total value of all of your accounts is used to determine the % of your conversion which will be tax free.

IOW, if you have any existing IRAs you should consult an actual expert before attempting a back door Roth.

10% seems awfully low, 50% is more typical.  It isn't uncommon for employers to limit deferrals to a % of pay, but 10% is stupid low.

It all depends on the company's plan and overall compensation.

Possible that the company will payout a profit sharing into their 401k instead of cash. They have a low contribution expecting the possibility of filling it up at year end.

The contribution limit for a 401k is 18k FOR THE EMPLOYEE ONLY, regardless of company match.  Max total per year is 53k, which includes the employer match....

Highly Compensated Employee Rule?

That's not in question here; OP's wife can't reach the $18K limit at 10% of "regular" salary.

That would seem to be the case especially if the wife's salary includes another form of compensation (as OP alludes to with profit sharing).

If she's one of the higher earners in the co., this is pretty common.

You could do a backdoor Roth as some have mentioned, or look into a LIRP (Life Insurance Retirement Plan)

It sounds crazy, I know, and life insurance is typically not viewed as an investment, but for high net worth/high earning individuals that don't qualify for a Trad./Roth IRA they are great. It's basically an overfunded life insurance policy (you'll want to talk to a financial advisor or rep you trust to avoid turning it into a Modified endowment contract) that you can invest in and draw from tax free. You'll technically be able to take the funds out at almost any time, but it's best to leave it there until retirement for the compounded interest

Seems doubtful that this is the reason.  Matching and Profit sharing don't count towards the $18k limit.  They count towards a much higher aggregate limit of $53k (2016).

My wife has been in this situation.  Apparently, the company reasoning is to limit max deductions so that lower compensated employees are treated fairly wrt tax savings.  Seems ludicrous, but that was the position from HR.

what you are mentioning doesn't sound like an HR thing, it's the IRS rules for what is referred to as Highly Compensated Employees. http://www.investopedia.com/terms/h/highly-compensated-employee.asp