WHAT IS AN AGE-WEIGHTED PROFIT SHARING PLAN?
An Age-Weighted Plan is a profit sharing plan in which the employer contribution is allocated to provide an assumed retirement benefit at normal retirement age. The Age-Weighted allocation, when accumulated to normal retirement age (i.e. 65), would purchase an equivalent retirement benefit as a percent of compensation. IS THERE ANY DISCRIMINATION TEST TO BE PASSED? This type of plan is also tested for nondiscrimination pursuant to Section 401(a)(4) of the Internal Revenue Code. The calculations involved are complex and difficult to explain in easy terms.
