Age-weighted Profit-sharing Plan
Plan that combines the simplicity and flexibility of the traditional profit-sharing plan with the best features of the defined benefit plan and the target benefit plan. By age-weighing the plan, higher contributions are permitted by the IRS for older plan participants. Under traditional profit-sharing plans, younger employees will have a larger contribution made by the employer on their behalf, but they are the least likely to be concerned with retirement and would rather have the cash. Age-Weighted Plans offer more flexibility in making contributions. Under defined benefit plans and target benefit plans, a minimum contribution has to be made each year in contrast to the profit-sharing plan. Age-Weighted Plans, as in the case with the traditional profit-sharing plans, limit the employer's maximum deductible contribution to 15% of the participant's compensation. The maximum annual contribution of any plan participant is equal to the lesser of 25% of compensation, or $30,000. There are no minimum required annual contributions or maintenance costs to reflect fees paid for the pension benefit guaranty corporation (PBGC) premiums, federal, or actuarial valuations. A significantly smaller contribution made on behalf of a younger employee will ultimately equal a significantly larger contribution on behalf of an older employee. Because of the effect of compound interest, the contribution on behalf of the younger employee will purchase the same retirement benefit as the contribution on behalf of the older employee.
Popular Insurance Terms
method of gaining illegal entry to perform a criminal act. If a policyholder makes a claim for loss of jewelry or rugs under a homeowners policy, or if a business owner makes a claim for ...
Re-registration of existing shares when there is any change in the name of the owner (s). Such a circumstance may occur when the owner (s) of the shares gives these shares to another ...
Measure used in the retrospective rating method for workers compensation insurance. A factor is applied to the incurred losses during the rating period in question in order to generate a ...
Rating system under which a specific premium rate, rather than a manual or class rate, is assigned to each unit of exposure. ...
Providing coverage for physicians' fees, expenses associated with nonsurgical care whether in the insured's home, hospital, or the physician's office, and expenses connected with X-rays and ...
Method of rating that compares property to be insured to a standard and adjusts the rate for deviations from the standard. A standard building is situated in a standard city of specific ...
Coverage for specialists in various professional fields. Since basic liability policies do not protect against situations arising out of business or professional pursuits, professional ...
State law by which insurance companies are permitted to establish deferred tax assets and liabilities subject to maximum limitations. ...
Interest adjusted method that measures the cost of life insurance. Named for the late distinguished actuary M. Albert Linton. This method compares a whole life policy with a combination of ...
Have a question or comment?
We're here to help.