The Perfect Plan...

2019 Plan Year

APC considers “The Perfect Plan” to be a 401(k) Safe Harbor Plan with a new comparability profit sharing allocation formula. A 5% of compensation contribution allows the “Highly Compensated” employees to maximize their 401(k) voluntary cash deferral ($19,000) without regard to “Non-Highly Compensated” employees’ deferrals percentage. The new comparability allocation method uses the 5% of compensation safe harbor contribution in a way that provides the owner’s group, in most cases, the ability to receive a maximum contribution of 100% of compensation or $56,000.

In summary, “The Perfect Plan” provides a 5% contribution for non-owner participants, has the employee benefit of a 401(k) plan, and allows owners to contribute the lesser of 100% of compensation or $56,000.


Key Points

  • Greater contribution benefits to specific groups of employees.
  • No stringent discrimination testing associated with traditional 401(k) plans.
  • Popular plan with employees; they have more control over their retirement plan and flexibility regarding their participation.
  • A 5% employee contribution can be used to satisfy both the 401(k) and profit sharing discrimination tests.
401(k) EE Deferral Contribution
Profit Sharing Contribution
Total Contribution
Key EE
Employee 1
At Employee's Discretion
Employee 2
At Employee's Discretion
Employee 3
At Employee's Discretion



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