CAN NEW COMPARABILITY BE USED WITH A 401(k) PLAN?
Yes, it works especially well for 401(k) plans in which the employees are not deferring enough to allow the highly compensated employees to defer at the level they desire. In these situations, the highly compensated are able to achieve the desired level of contribution through a new comparability profit sharing contribution, with no deferrals necessary. Since the highly compensated employees are not making salary deferrals, they are not limited by the level of deferrals from the nonhighly compensated employees. Since the highly compensated are not dependent on employee deferrals, a matching contribution is not needed to encourage higher levels of employee deferrals. ARE THERE ANY OTHER LIMITS OR TESTS? Yes, New Comparability plans are subject to all the other limits and discrimination tests applicable to all profit sharing plans and 401(k) plans. See our separate brochures for more information on these plans. In addition, new regulations were recently passed that require additional tes
Related Questions
- Can I move after-tax contributions that I already have in the AEP Retirement Savings plan to the new Roth 401(k) account?
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