New Comparability Plan

If you are a high net worth business owner whose primary objective is to maximize the benefit you and your higher paid workers receive under the plan, while minimizing the benefit your lower paid workers receive, CRB Wealth, LLC has the solutions for you with an Age-weighted or New Comparability plan. New Comparability plans take Age-weighted plans a step further. Rather than allocate contributions according to a formula based solely on age and compensation, New Comparability plans enable you to categorize employees by a variety of criteria, including ownership, tenure, age and job function. Each category may then receive a different contribution percentage

This approach may prove beneficial to companies that are considered top-heavy by the IRS because you are already making minimum contributions to eligible employees.

Key Benefits:

Employees are grouped as “Preferred” or “Non-preferred” with the preferred group(s) receiving a greater portion of the employer’s overall plan contribution. The contribution limits are the same as those of a traditional Profit-sharing plan.
Same flexibility as a traditional Profit-sharing plans. Contributions are not required every year and vesting schedules are available. Also, loans and hardship withdrawals are permitted.

Possible Drawbacks:

More administration costs than other plans
Subject to ERISA reporting requirements
No prototype documents are available
Subject to top-heavy testing and non-discrimination rules
The IRS has issued regulations which provide specific allocation rates for New Comparability Plans. Contact us and your tax advisor for more information