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
Coverage underwritten on members of a natural group, such as employees of a particular business, union, association, or employer group. Each employee is entitled to benefits for hospital ...
new dividend option under which the policyowner allows the dividends from the participating policy to be applied for the purposes of accumulating cash values. ...
Unexpected, unforeseen event not under the control of the insured and resulting in a loss. The insured cannot purposefully cause the loss to happen; the loss must be due to pure chance ...
Describing automobile accidents that are considered to be the results of the negligent acts of the insured driver and are included in the driving record of that insured. ...
Buildup of policy cash value, as distinguished from the death benefit. A policyholder has a choice between surrendering the policy for its cash surrender value or keeping it in force for ...
Projected percentage of the earned premiums that will be required by the insurance company to pay for the incurred losses plus the loss adjustment expense. ...
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 ...
Enacted on April 1, 1997; provides protection against creditors for irrevocable trusts provided that the trust has a grantor who is a discretionary beneficiary. In order for the statute of ...
State law that stipulates that goodwill as an admitted asset cannot be greater than 10% of adjusted surplus. ...
Have a question or comment?
We're here to help.