Incentive contributions to 401K

[Guest bvanlente]

Anyone hear of a plan feature that allows employer to contribute extra % of salary based on company performance to pre-determined bonus targets, or based on improvement over a historical base, e.g. like gainsharing except that instead of paying cash, company pays more into the 401K?

[david rigby]

Lots of instances of this. It is the very essence behind a profit-sharing plan: the amount of company contribution will depend on how much profit we have.

This concept is now extended to the 401(k) plan, which is a prfit-sharing plan. For example, "the company will match your employee contribution by 50%, but if our net profits are at least X% or$Y, then we will increase the match to 75%."

[RCK]

The primary question is whether the additional contribution is based on salary for eligibles (what I think of as a pure profit sharing contribution) or is based on the employee deferrals (a profit sharing Match). We have plans done either way, but I don't think that we have one that does both. The question as originally phrased was a "pure" profit sharing contribution, and as paraphrased by pax was a profit sharing match.

RCK