Profit Sharing
Profit Sharing Plans are designed to provide the plan sponsor with deductible contributions which are allocated to participants based on a formula. The contribution may vary from year to year and are not required.
The table below illustrates the potential differences in each allocation method:|
Eligible employee |
Age |
Compensation |
Traditional profit sharing plan |
Integrated Social Security |
Age-weighted |
New comparability |
|---|---|---|---|---|---|---|
|
Officer 1 |
57 |
230,000 |
46,000 |
46,000 |
46,000 |
46,000 |
|
Officer 2 |
48 |
230,000 |
46,000 |
46,000 |
46,000 |
46,000 |
|
Employee 1 |
50 |
40,000 |
8,000 |
6,731 |
9,418 |
2,000 |
|
Employee 2 |
35 |
30,000 |
6,000 |
5,048 |
2,077 |
1,500 |
|
Employee 3 |
25 |
20,000 |
4,000 |
3,366 |
613 |
1,000 |
|
Totals |
550,000 |
110,000 |
107,145 |
104,108 |
96,500 |
