Customized Plan Options

Read our article in CFMA’s Building Profits magazine on
Defined Contribution Plans & the Pension Protection Act of 2006.

As an owner or key employee, the methods discussed below can help
maximize your benefits to the highest level allowed by law.

"Boosting" Deferrals For All Employees
The employer can use the prevailing wage contributions to increase the deferral percentages for the non-highly compensated employees, thus helping the 401(k) plan pass the ADP/ACP test. This "boost" gives the owners and executives an advantage in saving for their retirement that isn’t available in a typical 401(k) plan, while at the same time saving you money on your prevailing wage projects (prevailing wage contributions can be treated as a Qualified Non-Elective Contribution).

"Offsetting" Contributions
Our plan design allows you to make profit sharing contributions for all of your participants, but "offset" the contributions for prevailing wage employees by the amount of current year prevailing wage contributions. This allows the employer to make contributions for the core employees without establishing a second plan or incurring additional costs for prevailing wage workers.

"Discriminatory" Profit Sharing Contributions
The employer can create several different employee classifications (i.e. owners, executives, supervisors, others, etc.), each receiving a different percent allocation of a profit sharing contribution. The employer could use the prevailing wage contributions, if applicable, to fund the minimum profit sharing allocations for the "other" category (this cross tested 401k plan would require a minimum 3% contribution).

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