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 in the event that, while practicing the profession of druggist, an act or omission is committed resulting in bodily injury, personal injury, and/or property damage to a customer. ...
Periodic payments to an injured person or survivor for a determinable number of years or for life typically in settlement of a claim under a liability policy. Terms may include immediate ...
Quantitative measurement of the total costs (losses, risk control costs, risk financing costs, and administration costs) associated with the risk management function, as compared to a ...
Property acquired before marriage by gift, by inheritance, or bought with separate monies. ...
Act that provides new funding for the Bank Insurance Fund and enhances the safety and soundness of the financial system. The FDICIA includes the Foreign Bank Supervision Enhancement Act ...
Deductible, applied to every loss, expressed as a percentage of that loss. As the loss increases, the deductible amount increases. ...
Type of coverage in which an insured's own policy provides indemnity for bodily injury and/or property damage without regard to fault. In many instances it is difficult if not impossible to ...
Balance sheet and profit and loss statement of an insurance company. This statement is used by State Insurance Commissioners to regulate an insurance company according to reserve ...
Action by the owner of a cash value policy to relinquish it for its cash surrender value. Since the depression of the 1930s, companies have reserved the right to delay payment of a cash ...
Have a question or comment?
We're here to help.