Retirement Strategies LLC, Little Chute Wisconsin

Cross-Tested Plans

A Cross-Tested Plan is a form of a Profit Sharing Plan where allocations are based on both age and compensation and allows for different allocation rates among different classes of employees (new comparability plan) or is allocated in a manner that solely takes into account age and compensation (age-weighted plan).

A cross-tested plan requires a custom document and is subject to complex nondiscrimination requirements. Due to this, administrative costs can be significantly higher. However, where cross-tested plans are a good fit, the added benefit will far outweigh the added costs.

DESIGN FEATURES

Who May Adopt?

Employers of all sizes

Employee Eligibility Requirements

Maximum Requirements for profit sharing components
	Age 21 and 2 years (1,000 hours per year) of service
* Less restrictive requirements allowed

Employee Deferral Contributions

Employer Matching Contributions

Cross-tested plans can be combined with either a 401(k) or a safe-harbor 401(k) plan. Deferral and match contributions are subject to the same limitations as those types of plans.

Employer Profit Sharing Contributions

Formula based on either:
	New comparability formula, or
	Age-weighted formula

Maximum Annual Contributions

Employer Contributions are limited to:
	25% of eligible participant wages

Employee Annual Additions are limited to:
	Lesser of $49,000 or 100% of compensation (2009)

Are Catch-up Contributions Allowed?

Yes, if 401(k) deferrals are allowed by the plan provisions. Catch-up contributions are limited to:
	$5,500 (2008)
	$5,500 (2009)

Contribution Deadlines

Employee Deferral Contributions
	Must be deposited by the 15^th business day following the month of deferral, or sooner if administratively feasible- the DOL has indicated that contributions made within 7 days will not be considered late

Employer Contributions
	Must be made by the employer’s tax filing deadline, including extensions

Vesting Schedule

If a two (2) year eligibility service requirement is elected, Employer Contributions are 100% vested immediately

If a one (1) year or less eligibility service requirement is elected, Employer Contributions may be subject to a vesting schedule which must be defined in the plan document.

Withdrawals and Loans

Withdrawals permitted only upon termination, death, disability or retirement.

Plans may elect to allow hardship or in-service withdrawals

Plans may elect to allow plan loans and must specify the parameters under which a participant can take a loan.

Administration & Reporting Requirements

Top-heavy testing required

Form 5500 filing required

Fidelity Bond required