Plans We Support

ABG MI  will help you select the right plan—one that will benefit your company and your employees.
Learn more about the different plans we support below.

A 401(k) plan allows employees to contribute a portion of their salary on a pre-tax basis. The employer may make additional contributions to the plan in the form of a matching contribution or non-elective contribution.

401(k) plans are subject to special non-discrimination testing that may limit the amount that highly compensated employees may contribute to a multiple of the average contributed by non-highly compensated employees.

More and more employees perceive 401(k) plans as a valuable benefit, which has made them the most popular type of retirement plan today. Employees can benefit from a 401(k) plan even if the employer makes no contribution. Employees voluntarily elect to make pre-tax contributions through payroll deductions up to an annual maximum of $17,500 (2014 limit).

Employees 50 years of age or older can elect to take advantage of newly enacted "Catch-Up" provisions and contribute an additional $5,500 (2014 limit) bringing their annual total up to $23,000. The additional contribution is not subject to non-discrimination or employer maximum deduction limitations.

Often the employer will match some portion of the amount deferred by the employee to encourage greater employee participation, i.e., 25% match on the first 4% deferred by the employee. Since a 401(k) plan is a type of Profit Sharing plan, profit sharing contributions may be made in addition to, or instead of, matching contributions. Many employers offer employees the opportunity to take hardship withdrawals or borrow from the plan.

Employee and employer matching contributions are subject to a special non-discrimination test which limits how much the group of employees referred to as a "Highly Compensated Employees" can defer based on the amount deferred by the "Non-Highly Compensated Employees". The plan may be designed to satisfy "401(k) Safe Harbor" requirements (certain minimum employer contributions and 100% vesting of employer contributions) which can eliminate this non-discrimination test.

A Safe Harbor 401(k) plan is one under which an employer is able to avoid non-discrimination testing on employee deferrals by making a fixed, 100% vested contribution to eligible employees.

The contribution may be made as a match to each participant’s deferrals of 100% up to the first 3% of compensation and 50% of the next 2%, or as an employer non-elective contribution of 3% of compensation to all eligible participants. The employer has the option of limiting these contributions to non-highly compensated employees.

A written notice is required to advise participants of the use of the safe harbor election and the option selected. The notice should be provided within 30 – 90 days before the beginning of the plan year.

Employers which have historically had difficulty allowing key employees to defer as much as they would like and pass non-discrimination testing would benefit from this type of plan design.

A Profit Sharing plan is one in which annual contributions are determined at the employer’s discretion. Allocations can be based on a formula, a fixed dollar amount or percentage of compensation, integrated with social security or allocated to defined groups or employees.

The Profit Sharing plan is one of the most flexible qualified plans available. Company contributions to a Profit Sharing plan are usually made on a discretionary basis. Each year the employer decides the amount, if any, to be contributed, which cannot exceed 25% of the total compensation of all eligible employees. The contribution is usually allocated to employees in proportion to compensation and may be integrated with Social Security, which results in larger contributions for higher paid employees.

In profitable years, the employer may choose to contribute the maximum permissible. In lean years, they may opt for a lesser amount or no contribution at all. Flexibility is the main advantage of this plan type to many employers.

Age-Weighted Profit Sharing Plans: Profit Sharing plans may also use an age-weighted allocation formula that takes into account each employee's age and compensation. This formula results in a significantly larger allocation of the contribution to employees who are closer to retirement age. Age-weighted Profit Sharing plans combine the flexibility of a Profit Sharing plan with the ability of a pension plan to skew benefits in favor of older employees.

A New Comparability plan is a type of defined contribution plan which is structured to favor older, long-term employees who are key to the employer’s business. This is accomplished by “cross-testing” the contributions deposited each year on the basis of benefits that will ultimately be provided. New comparability allocations may be used in any 401(k), Profit Sharing or Money Purchase plan.

Allocation groups may be defined by job classification, ownership amounts, divisions or another objective business criteria.

This plan design is attractive to the employer that wishes to maximize contributions to key employees while minimizing overall costs.

A Cash Balance plan is a type of Defined Benefit plan with characteristics similar to a Profit Sharing plan. As such, Cash Balance plans are often referred to as a hybrid plan. In a traditional Defined Benefit plan, the participant accumulates a specified benefit at retirement age. In contrast, a Cash Balance plan expresses the participant’s accumulation in terms of an actual account balance ear-marked for them year-to-year. Additionally, Cash Balance plans generally provide the greatest annual contribution limits allowed by law. As a result, a Cash Balance plan can often be an extremely attractive option for employers seeking to maximize annual contributions to rapidly accumulate meaningful retirement savings.

ABG MI provides professional, client-responsive pension administration and actuarial services to sponsors of Defined Benefit plans at a savings of 25% to 50% of what they would pay large actuarial firms. Historically, the traditional forms of these plans have been the backbone of the private, multiple employer and multi-employer retirement system and they continue to require the highest level of expertise for successful operation. The Defined Benefit plan is a unique tool for quickly accumulating retirement funds. Instead of determining contributions, and investing them to produce the greatest possible benefit, the Defined Benefit plan defines the benefit formula, and determines appropriate contributions to fund the benefit.

The Alliance Benefit Group Consulting team supports your goals and needs in designing the benefits that will best suit your organization. These services are offer by ABG’s professional consultants, enrolled actuary, experienced benefit specialists, and client service assistants who will provide you the best, most complete service possible. Annual services include:

  • Valuing assets, liabilities and accumulated plan benefits
  • Determining pension expense and funded status for financial reporting
  • Recommending funding level alternatives
  • Testing for plan termination sufficiency
  • Providing individual participant benefit statements
  • Certifying actuarial information in reports to governmental agencies

Our consultants will provide the technical knowledge to assure that your Defined Benefit plan stays current with the ever-changing rules and regulations of pension law and will assist you in plan modifications as needed to accomplish your goals. They will also prepare the mandatory participant notices, for you and your counsel’s review, relating to plan changes.

In addition, if you are moving from one plan to another, or are contemplating any changes in your Defined Benefit plan, our enrolled actuary and client service assistants will study the effects of any proposed plan changes and determine their financial impact. We will design alternative benefit provisions, assist in traversing the complex requirements for plan termination, or ease the difficult transition from any prior pension plan or service provider.

An Employee Stock Ownership Plan (ESOP) is a defined contribution plan which makes the employees owners of the company. As owners, employees may be more motivated to improve corporate performance because they can benefit directly from company profitability. The primary investment of the ESOP must be company stock, although most plans will also include a cash fund for transactions.

An ESOP may be leveraged, allowing the employer to borrow money and pledging shares of employer stock into a suspense account to be released as the loan is repaid. In a non-leveraged ESOP, contributions are made in shares of stock or to purchase shares of company stock.

ESOP’s are used by employers seeking a source of capital while providing employees with a personal stake in the performance of the company.

A 403(b) plan is a tax sheltered annuity plan that may only be sponsored by certain tax-exempt and governmental organizations. The 403(b) is similar to the 401(k) plan but has its own special rules and limitations.

A 457 plan is a deferred compensation plan sponsored by a State, political subdivision or tax exempt organization. Although the 457 is a non-qualified plan, if the plan meets certain limits and restrictions some tax advantages can be realized.

A Non-Qualified plan is a deferred compensation arrangement that does not have to satisfy the specific qualification rules of qualified plans and so does not reap the tax advantages. The plan is generally unfunded, meaning that the assets actually belong to the employer until distributed.

A Non-Qualified plan may be established to allow key personnel to receive benefits in excess of those provided or permitted under the employer’s qualified plan(s).

A Section 125 or Cafeteria Plan is an arrangement that allows employees to pay for qualifying expenses on a tax-free basis. Qualifying expenses include medical, dental and vision insurance premiums, group term life, unreimbursed medical expenses, dependent care expenses and other expenditures.

Access the U.S. Department of Labor comparison chart of the features and options of various plan types.

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