Age-Weighted Plan

• Plan description
• Key features
• Who can establish
• Annual contributions
• Annual fees

Plan description

An employer contribution is allocated among employees based on relative age and salary. This results in older, more highly compensated employees receiving a greater portion of the contribution.

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Key features

• Age-weighted formula is determined by the salary range and age of employee.
• Employers are permitted to add a 401(k) salary-deferral feature.
• Vesting schedule is determined by employer.
• Withdrawals are governed by the plan document and may be restricted.¹
• Employers may offer participant loans.

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Who can establish

Self-employed persons, partnerships, S-corporations², C-corporations² and nonprofit groups.

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Annual contributions

Please see Retirement Plan Limits for the current compensation and contribution limits for this plan.

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Annual fees

Due to the complexity involving the contribution calculation and nondiscrimination testing, retirement plan administrative services are required.

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¹Amounts withdrawn from retirement plans are generally includable as taxable income in the year received and may be subject to tax penalties if withdrawn prior to 59½.

²S-corporations and C-corporations are two different types of legal structures, each of which is subject to different tax rules.

This information does not constitute tax advice. Please consult your tax adviser about your particular situation.