New Comparability Profit Sharing for Small Business 401(k) Plans
How new comparability profit sharing works: Learn how employers can allocate different contribution percentages to different employee groups instead of using a single, uniform formula.
Compliance and cross‑testing requirements: Understand how IRS nondiscrimination rules and cross‑testing help ensure new comparability plans don’t unfairly favor highly compensated employees.
Comparing profit sharing formulas: Explore how new comparability stacks up against simpler profit sharing formulas and when each approach may make sense based on business goals and workforce demographics.
Managing a small business requires making smart financial decisions, and having more flexibility in how your business contributes to employee retirement savings can make a huge difference. A new comparability profit sharing plan allows employers to allocate different contribution amounts to different groups of employees—unlike traditional profit sharing plans that apply the same formula to everyone.
Download this PDF resource to learn how new comparability plans work, when they may be a good fit, and what’s required to stay compliant.