Owner objective
Define the target in dollars.
Separate the desired employer contribution from employee deferrals, catch-up contributions and amounts already funded by the employer.
Frame the owner contributionFor advisors / 401(k) profit sharing
Move the conversation from “max contribution” to “best-fit plan design.”
Help business-owner clients compare contribution goals, employee cost and allocation alternatives without turning the relationship over to another provider.
EDUCATIONAL TOOLS TODAY / CASE-SPECIFIC DESIGN WORKFLOW IN DEVELOPMENT
Designed to support the advisor relationship
The employerSets the owner target, employee budget and business priorities
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The advisorOwns the relationship and frames the retirement-plan opportunity
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NewComparability.comProvides focused design education, scenarios and a planned testing workflow
KEEP THE CLIENT / KEEP THE RECORDKEEPER / KEEP THE TPA WHEN THE DESIGN CAN BE SUPPORTED
The client problem
The owner wants more. A uniform formula may make that expensive.
The advisor does not need to begin with 401(a)(4) terminology. Begin with the business objective: how much should go to the owner, what employee funding is acceptable, and what plan design can reasonably support both?
Employee cost
Put the staff funding beside the owner benefit.
A design is easier to evaluate when the client can see owner dollars, employee dollars and total employer funding on the same page.
Compare allocation methodsProvider fit
Separate a rule problem from a service-model problem.
A provider may decline a design because of testing, document language or the provider’s own administrative limits. Those are different answers.
Understand why a provider may say noA client-ready comparison
Same owner target. Different employer cost.
Assume an owner earns $300,000 and wants a $45,000 employer contribution. Three eligible employees earn $150,000 in total.
The economics before the compliance conclusion.Illustrative
EMPLOYER PROFIT-SHARING DOLLARS / NOT A COMPLETED NONDISCRIMINATION TEST
| Illustration | Owner | Employees | Total employer funding |
|---|---|---|---|
| Pro rata at 15% | $45,000 | $22,500 | $67,500 |
| New Comparability illustration | $45,000 | $7,500 | $52,500 |
The $15,000 difference is an economic illustration, not proof that the New Comparability row passes. Census demographics, ownership, plan terms and testing still control the final result.
A better advisor workflow
Use the design question to deepen the relationship, not replace it.
- Start with the owner’s objective. Ask for the target employer contribution and acceptable total employer budget.
- Benchmark the current formula. Show what pro rata or the existing allocation produces before proposing something more complex.
- Identify the binding constraint. Is the issue the rules, the document, the employee demographics or provider support?
- Compare alternatives on the same basis. Hold either the owner target or the total budget constant so the client can see the real tradeoff.
- Keep implementation with the existing team when practical. The planned workflow is designed as a specialty design/testing layer, not a reason to move the client solely for the sake of a formula.
Use these in the next client conversation
Start broad. Go technical only when the case requires it.
Client education
Explain 401(k) profit sharing in plain English.
Start with the employer contribution and the different ways it can be allocated.
Read the profit-sharing guideScenario tool
Show the tradeoff before discussing a provider change.
Use hypothetical inputs to compare owner targets, employee funding and contribution headroom.
Open the calculatorDesign examples
Bring a worked example to the meeting.
Use six fictional cases covering fixed budgets, different owner goals, safe-harbor funding and larger staffs.
See six allocation examplesA specialty design desk for advisors is in development.
Join the waitlist as an advisor for early-access updates. The planned model is designed to support your client relationship and existing provider team.