New Comparability
Baden Retirement Plan Services is an independent third party administrator (TPA) of new comparability plans. A new comparability plan is a profit sharing plan in which employees (plan participants) are divided into groups, with each group receiving an employer contribution that is a different percentage of compensation. A new comparability plan could be an option for an employer (plan sponsor) that wishes to reward key employees while contributing a minimum amount for other employees. The plan sponsor can choose set up the plan to maximize contributions to the company owner(s), to reduce the cost of employee benefits or to benefit key employees. Out services for new comparability plans include, among others:
- New Comparability Plan Documents
- New Comparability Plan Administration
- New Comparability Plan Compliance Testing
- New Comparability Plan Consultation
- New Comparability Plan Daily Valuation and Recordkeeping
- New Comparability Plan Form 5500
- New Comparability Plan Design
New Comparability Plan
- Typical number of employees in the plan: Unlimited number of eligible employees
- Features: In a new comparability plan, age and compensation are used to determine future benefits. Employer contributions, or allocations, are converted into equivalent benefits must be non-discriminatory. The average of allocation rates for the highly compensated employees (HCEs) must not exceed the average allocation rate for the non-highly compensated employees (NHCEs). The plan sponsor can group employees who have allocation rates within a certain range. A new comparability plan must satisfy general text requirements in Internal Revenue Code §410(b). A new comparability plan can be combined with other retirement plans.
Similar to a 401(k) plan, a new comparability plan must comply with applicable Internal Revenue codes and the Department of Labor’s Employee Retirement Income Security Act of 1974 (ERISA), which is the federal law that sets minimum standards for operating most voluntarily established tax qualified retirement plans to provide protection for individuals who participate in the plans.
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