What is a New Comparability Profit Sharing Plan?

New Comparability Profit Sharing Plan

New comparability profit sharing is a type of profit sharing plan that allows employers to allocate a larger percentage of the company's profits to certain employees, typically higher-paid or key employees, compared to a traditional profit sharing plan.

In a new comparability profit sharing plan, the employer groups employees into different categories based on their compensation levels, job titles, or other factors. Each group is then assigned a different percentage of the company's profits to be allocated as contributions to their retirement accounts.

For example, the employer may assign 10% of profits to a group of executives earning $200,000 or more per year, while assigning only 5% to a group of administrative staff earning less than $50,000 per year.

This type of plan can be attractive to employers who want to reward and retain their top-performing employees, while still offering some level of retirement benefits to all employees. However, it can also be complex to set up and administer, and may require the services of a financial professional or retirement plan expert.