AGE WEIGHTED PROFIT-SHARING PLANS
Age Weighted Profit-Sharing Plans (AWPS) are similar to the Target
Benefit Plans described above, except that the contribution is
discretionary, rather than mandatory.
In some circumstances, a better allocation can be achieved under
these plans, because Target Benefits are based on a three year
average of compensation, while the AWPS is based on current compensation.
DEFINED BENEFIT PLANS
In contrast to the previously described plans, defined benefit
plans are designed to provide a desired retirement benefit for
each participant. This type of plan can allow for a rapid accumulation
of assets over a short period of time. The required contribution
is actuarially determined each year, based on factors such as age,
years of employment, the desired retirement benefit, and the value
of plan assets. Contributions are generally required each year
and can vary widely. The maximum benefit allowed to be funded is
100% of compensation, to a maximum of $175,000. Note that this
is NOT a CONTRIBUTION limit.
For an example of what a first year contribution might look like,
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