Profit Sharing calculation

[Guest JohnSB]

In a profit sharing plan, a participant hired in February and eligible in June. When calculating their portion of profit sharing contribution, would you base it on all wages for the year or only those since their eligibility date?

[Guest dmartin@swerdlin.net]

The plan document will answer this question. See how Compensation is defined for contribution allocation purposes.

[Tom Poje]

note: if plan is top heavy it has to be total comp regardless of date of entry

[BG5150]

note: if plan is top heavy it has to be total comp regardless of date of entry

Only the first 3% (the top heavy minimum).

We do our allocations based first on participation comp (if the plan allows). If there are people who only had partial year compensation, and the allcoation was less than 3% using participation comp, we up them to 3%.

[PLAN MAN]

We do our allocations based first on participation comp (if the plan allows). If there are people who only had partial year compensation, and the allcoation was less than 3% using participation comp, we up them to 3%.

Are you saying if the participant's allocation is more than 3% of participation comp. you do not compare that amount to 3% of full year comp. to determine if the top-heavy minimum is satisfied? The participant should receive the greater amount.