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