“Cross-tested” plans offer advantages to plan sponsors

Description

Abstract: When funding profit sharing contributions, one type of plan has proven to be very effective. Known as “cross-tested” plans, they provide a unique profit sharing contribution into retirement plans. Cross-tested plans — a hybrid combination of defined contribution and defined benefit concepts — allow employers to fund a specific targeted group of employees while also meeting the needs of other employees. This article reviews these plans and whether one may be right for your company.