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Effective Plan Design

Plan design is crucial for any corporate sponsored retirement plan. It’s the bedrock upon which plan actions take place. We start by addressing the expectations of the business owner (or owners), valued team members, and loyal employees. Then, by leveraging expertise gained through decades of working with retirement plans, we help you partner with a third party administrator (TPA) to tailor an appropriate plan design that aligns with your company’s goals.

Example of plan design options:

  • PROFIT SHARING: Profit sharing plans offer employers both design flexibility and discretion with respect to contributions. Employer contributions are not required and can be allocated in a number of ways. Maximum employer deductions are limited to 25% of annual compensation or the annual maximum contribution limit, whichever is less. 
  • SAFE HARBOR: Safe Harbor plans allow owners and highly compensated employees to maximize deferrals. However, they do require specified employer contributions, and all contributions are immediately vested. 
  • NEW COMPARABILITY: This allocation method allows an employer to divide its employees into different groups and allocate contributions based on group association. Keep in mind that this is a fairly technical option and you will need to work with a TPA for plan specifics. However, after the testing requirements are met, an employer may provide larger benefits to certain employee groups.

Stretch The Match

One way that plan sponsors are motivating participants to save more is by stretching the match— revising matching contribution formulas so participants have an incentive to increase their deferral rates. A plan sponsor can choose a variety of matching formulas without increasing the overall amount of the matching contribution. Below are two of the most common employer match configurations:

When you partner with GFP Investment Services we will discuss modern features and strategies that forward-thinking plan sponsors are using to seek to improve employee benefits and put more participants on a sound, simplified path toward a secure retirement.