Profit Share Allocation

[coleboy]

We have a client who is a non-profit organization. They want to do a profit share allocation based on the following:

1% for less than 1 year of service

3% for 1 to 4 years of service

5% for 5 or more service of service.

Is this possible? Would they have to go with an individually designed document? Or would a non-standardized document work?

Is this considered a points method allocation? I have never seen one done before.

Any thought, opinions, comments are welcomed!

Thank you!

[rcline46]

This allocation must be general tested or even cross-tested. It is a tiered new comp plan and the formula must be in the plan document at least by year end, maybe sooner depending on allocation conditions.

If there are NO HCEs in the plan, it passes automatically.