Age-weighting - Profit sharing contributions are allocated to favor older employees since these participants have less time to accrue benefits before retiring.
Cross-testing - Also known as a new-comparability design, different levels of profit sharing contributions may be given to different groups of employees as long as certain discrimination tests are met.
Employee deferrals - An employee election to contribute a portion of pay that is not currently available to be redirected to a 401(k) plan. (Limitations as to the amount or percent of deferral is set by the employer and defined in the plan document.)
Employer match - Employer contributions made pursuant to employee deferrals. Only employees who defer may receive a matching contribution in a formula set by the employer. (The formula may change year-to-year based upon the plan document.)
ESOP - Company owners looking to share ownership with their employees and who may be looking for a retirement strategy may sell some or all of their shares to a retirement plan in a tax-favored manner. Review the ESOP process here.
Pro-rata or integrated profit sharing - Not always dependent upon profits, a contribution to all eligible participants. Contributions are the ratio of your pay to everyone's eligible pay (pro-rata) or may have an extra contribution if you earn over the taxable wage-base.
Safe harbor - A plan design alleviating the plan sponsor from certain discrimination testing. Employer contributions may be a match or non-elective (i.e., does not depend upon employee deferrals). Contributions are 100% vested and have notice requirements.