Profit Sharing Plans

What is a profit sharing plan limited to in regards to a total employer covered compensation?

25%

When must contributions be made prior to?

Company's income tax return

New Comparability Plan

Contributions are based on employee classification. Designed to skew benefits towards owner classification

Who may establish a 401(k)?

Corporations Partnerships LLCs Sole Proprietorships Tax-exempt entities

Standard Allocation:

Equal percentage to all participants

401(k)

Predominately funded by employee deferral contributions and the most used. Attaches to a profit sharing or stock bonus plan. Permits employees to defer compensation to a qualified plan.

Social Security Integration:

provides higher allocations to employees whose earnings are greater than the Social Security Wage base

Age-Based Profit Sharing Plans Allocation of Contributions:

uses a combination of age and compensation to allocate the plan contribution