Profit Sharing Plan – This is the most flexible of plans as the employer chooses the level of contribution. However, contributions are limited to 25% of eligible payroll. New IRS regulations have increased flexibility by introducing ‘age weighted’ and ‘new comparability’ plans.
401k Plan – This plan encourages employee participation by allowing deferrals of otherwise taxable income. The employer may choose to ‘match’ the deferral. There are many variations with this type of plan.
New Comparability and Age-Weighted Plans – These plans give the traditionally accepted forms of Profit Sharing Plans a wider base for contributions for the senior members of the company, while affording equitable funding for the employers’ younger staff members.
Defined Benefit and Cash Balance Plans – These plans best serve an employer wishing to provide a retirement benefit related to income and favors older employees who have a longer service history. These plans are formula driven and limit the flexibility in the funding requirements.