Question

Which of the following are examples of a cross-tested plan?

A) Traditional profit-sharing plan
B) Age-based profit-sharing plan
C) New comparability profit-sharing plan
D) Profit-sharing plan with a Section 401(k) provision

Answer 1

B) Age-based profit-sharing plan and C) New comparability profit-sharing plan

Cross-tested plans include Age-based and New comparability profit-sharing plans, which benefit workers based on age or other factors, unlike Traditional profit-sharing or 401(k) plans.

Step-by-step explanation:

Examples of a cross-tested plan include Age-based profit-sharing plans and New comparability profit-sharing plans. These are types of retirement plans that allow employers to contribute varying amounts to different employees based on categories like age, thereby potentially benefiting older workers who are closer to retirement. On the other hand, a Traditional profit-sharing plan typically allocates contributions as a percentage of salary without considering age or years to retirement, and a Profit-sharing plan with a Section 401(k) provision allows employees to make pre-tax contributions, which are not directly related to cross-testing methods.