New Comparability Plan

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

Plan description

A new comparability plan is a profit sharing plan with an allocation formula that divides employees into two groups: preferred and nonpreferred. The contribution is allocated within each group according to relative age and compensation.

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Key features

• Employers are permitted to add a 401(k) salary-deferral feature.
• Vesting schedule is determined by the 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¹Amounts withdrawn from retirement plans are generally includable as taxable income in the year received and may be subject to tax penalties if withdrawn prior to 59½.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.