Two commonly adopted plan designs that are required to have employer contribution intentions decided before the plan year end are cross-tested and cash balance:
Cross-Tested Plan Design - Cross-testing is a method of allocating an employer profit sharing contribution where contribuions are allocated to employer defined classes. It requires additional annual testing. The contribution objective and initial testing should be prepared before year-end.
Cash Balance Plan - If 2020 has been a very successful year and you are looking for a new idea to shelter even more money than the defined contribution limit of $58,000, call your ARS Plan Administrator to discuss adding a Cash Balance Plan. Depending on the company's demographics, company contributions can be as high as $230,000 for owners with contributions of 8-12% of compensation for employees total between both the 401(k) and Cash Balance Plan contributions.