New comparability consulting can produce a plan design that employs an innovative allocation formula to maximize the benefits of the owners and higher paid employees. If the plan passes the required nondiscrimination tests and complies with other general rules applicable to qualified retirement plans, a profit-sharing contribution can be distributed using a formula that generally results in the owners/higher paid employees receiving a greater percentage of pay allocated to their account than the rank and file/lower paid employees.

Advantages include:

• A greater percentage of the plan's contribution may be allocated to targeted groups of employees
• The contribution may be discretionary, thus permitting flexibility concerning the dollar amount allocated each year
• Provides less complex funding requirements and administrative costs than a defined benefit plan
• Can be a component of a 401k plan
• Allows for maximum employer control over the contribution.

This plan design utilizes cross testing, which means that the contribution allocation is converted to an actuarially projected value (such as in a defined benefit retirement plan) and tests the equivalent benefits using certain actuarial assumptions. Concerns to be addressed by our professional retirement consultants include the age distribution of your work force, your personal goals and the requirement to revisit the allocation formulas annually to ensure that the formulas meet compliance requirements for each plan year.