Cross-Testing: The Right Tool for Many Jobs
In this issue:
- The General Concept
- The Ground Rules
- Contribution Groups
- Contribution Gateway
- Average Benefits Test
- Practical Uses for Cross-Testing
- Rewarding Employees
- Reimbursing Surrender Charges or Market Value Adjustments
As the national economy continues its recovery, more and more businesses are beginning to see their financial situations improve to near pre-recession levels. Companies that have not thought about making profit sharing contributions for years are starting to consider their options.
Just as the economy as a whole or the circumstances of a particular company change over time, companies should review their retirement plans to make sure the design changes with them.
Companies that find themselves on solid footing may find themselves thinking of making employer contributions to their retirement plans. Whether the goal is to maximize benefits to the owners, reward employees, reduce tax liability or some combination of all of these, the cross-tested plan design is one worth considering.
This newsletter is intended to provide general information on matters of interest in the area of qualified retirement plans and is distributed with the understanding that the publisher and distributor are not rendering legal, tax or other professional advice. Readers should not act or rely on any information in this newsletter without first seeking the advice of an independent tax advisor such as an attorney or CPA.