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Companies we provide service to
The profit-sharing plan is generally the most flexible qualified plan that is available. Company contributions to a profit-sharing plan are usually made on a discretionary basis. Each year the employer decides the amount, if any, to be contributed to the plan.
The contribution is usually allocated to employees in proportion to compensation. It may be allocated using a formula that is integrated with Social Security, resulting in more substantial contributions for higher-paid employees.
Amounts contributed to the plan accumulate tax deferred and are distributed to participants at retirement, after a fixed number of years or upon the occurrence of a specific event such as disability, death, or termination of employment.
Profit-sharing plans may also use an age-weighted allocation formula that takes into account each employee’s age and compensation. This formula results in a significantly larger allocation of the contribution to eligible employees who are closer to retirement age. Age-weighted profit-sharing plans combine the flexibility of a profit-sharing plan with the ability of a pension plan to provide benefits in favor of older employees. The age-weighted plan allows the company to contribute up to 25% of eligible payroll each year. Unlike the typical profit-sharing plan, the total contribution to an age-weighted plan is allocated based on the employee’s age. The older employees will receive a higher contribution than younger employees. This plan type is favorable when the employees targeted to receive larger allocations, are both older and more highly compensated than all other employees.
Begin your journey with Integrated Pension Services. We have a wide array of plans which you can discuss with one of our professional staff members.