Features

 

 

Age-Weighted Profit Sharing

 

 

Defined Benefit

 

Age

21

Same as Age-Weighted

Same as Age-Weighted

Service

1 year, or 2 years with 100% vesting

Same as Age-Weighted

Same as Age-Weighted

Classification

Union & non-resident aliens

Same as Age-Weighted

Same as Age-Weighted

Other exclusions

Yes, if plans satisfies §410(b)

Same as Age-Weighted

Same as Age-Weighted

Lesser of 40%, OR 50 employees

N/A

Yes

Yes

Amount

Value of account

Plan formula

Hypothetical Acct. Value

Permitted Disparity

Imputed permitted disparity

Yes, DB

Yes, DC

Past Service Credit

No

Yes

Yes

Minimum Funding

No

Yes

Yes

Accrual Rate

Uniform

Uniform

Front Loaded

Ease of Participant Understanding the Benefit

Excellent

Fair

Excellent

Investment Risk

Employee

Employer

Employer

Subsidies

No

Yes

Generally, no

Death

Value of account

Survivor Annuity

Value of account, payable as annuity if no spousal consent.

Contributions

100%/$44,000 in 2006

N/A

N/A

Benefits

N/A

100% of compensation / $175,000 (2006)

100% of compensation/ $175,000 (2006)

Contributions

Amount

Discretionary

Minimum Funding Requirements

Same as DB

Rollovers

Yes

Yes

Yes

Pre-tax or Roth

Yes

No

No

After-tax

Yes

Usually no (never allowed in prototype plans)

Same as DB

Show value of participant's benefit

N/A

Show value of participant's benefit

Actual allocation of plan assets

N/A

Hypothetical allocation of contributions and investment earnings

Nondiscrimination rules

Yes, under Cross Test 401(a)(4)-8

Yes

Yes, under Cross Test 401(a)(4)-8

Safe Harbor

N/A

Yes 401(a)(4)-3

No

Employer Contributions

Discretionary

Minimum Funding Standards

Minimum Funding Standards

Actuary

No

Yes

Yes

Unfunded Liabilities

No

Yes

Yes

Overfunded Potential

No

Yes

Yes

Conversion to Cash Balance Plan

N/A

Due to pending legal actions in federal court, the ability to convert existing defined benefit plan to a cash balance plan without causing a violation of age discrimination laws is in doubt. This does not affect a new cash balance plan.

N/A

Pooled

Yes

Yes

Yes

Employee Directed

Possible

No

No

Loans

Yes

Generally No

Generally No

Hardship

Yes

No

No

In-service

Yes

After Normal Retirement Age

After Normal Retirement Age

Early retirement

Yes

Yes

Yes

Disability

Yes

Yes

Yes

Late

Yes

Yes

Yes

Termination

Yes, immediate payment

Yes, deferred payment

Yes, immediate payment

Normal

Lump Sum

Annuity

Annuity

Optional Installments

Yes

Generally, no

Generally, no

Lump Sum

N/A

Generally, no

Yes

Vesting

Statutory Schedules

Same

Same

PBGC

No

Yes

Yes