Profit Sharing
Profit Sharing Plans are designed to provide the plan sponsor with deductible contributions which are allocated to participants based on a formula.  The contribution may vary from year to year and are not required.
The table below illustrates the potential differences in each allocation method:

Eligible employee

Age

Compensation

Traditional profit sharing plan

Integrated Social Security

Age-weighted

New comparability

Officer 1

57

230,000

46,000

46,000

46,000

46,000

Officer 2

48

230,000

46,000

46,000

46,000

46,000

Employee 1

50

40,000

8,000

6,731

9,418

2,000

Employee 2

35

30,000

6,000

5,048

2,077

1,500

Employee 3

25

20,000

4,000

3,366

613

1,000

Totals

 

550,000

110,000

107,145

104,108

96,500