Types of Profit Sharing Plans include:

1. Traditional -- The contribution is allocated in proportion to compensation.
2. Integrated with Social Security -- The contribution is slightly skewed in favor of the higher-paid participants.
3. New Comparability (Owner-Weighted) -- The contribution is skewed in favor of the owners or other key individuals.
4. 401(k) -- The employee elects to have a portion of his salary deferred by the employer. The amount that the highly-compensated participants can defer may depend on the amount that the non-highly compensated participants defer. The employer may make a matching contribution based on compensation and the elective deferral amount.
5. Combination plans -- A 401(k) plan can be combined with any of the other types of profit sharing plans to provide for a discretionary contribution. However, the total Employer contribution (profit sharing and match) cannot exceed 25% of Plan Compensation.

The new comparability profit sharing plan is state-of-the-art. The following types of employers could benefit from this type of plan:

1. Employers who wish to skew the contribution in favor of older or key employees.
2. Employers who desire discretionary contributions.
3. Employers who wish to avoid paying overly-generous benefits to young participants who terminate service with the company.

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