What is a New Comparability plan?
If you haven’t had your retirement plan reviewed or updated recently, you may not be taking advantage of age-weighted allocations and new comparability formulas that benefit plan participants as they approach retirement age. These plans are designed to take advantage of “cross-testing” — where your contributions are tested on the basis of benefits at retirement age rather than on the basis of amounts contributed.
If you’re an owner with younger employees, the contribution amounts that result from applying cross-testing may be more beneficial to older employees than profit-sharing plans that use a pro rata formula or even an integrated profit-sharing formula.
How much more could you be allocating to your own retirement?
Call 800-523-1125 to have a Retirement Program Specialist prepare a personalized recommendation for you.
How much more could you allocate to your own retirement account by changing plans?
The amount you allocate to your own retirement account by changing plans will vary depending on the age and compensation of you and your employees. You can speak with a Retirement Program Specialist at 800-523-1125 who will take this information from you over the phone. Then based on the information you provide, you’ll then receive a complimentary Retirement Plan Recommendation.
What are the costs of converting an existing plan to a New Comparability plan?
We do not assess a charge to convert an existing plan to a New Comparability plan. Retirement plans may be updated and transferred to the ADA Members Retirement Program with no loss of tax benefits. You may, however, incur charges from your vendor when leaving. Before converting, you should consider the costs associated with leaving your current vendor, which could include a contractual withdrawal charge. In most cases, we are able to take care of everything you need to convert your existing plan to the ADA Members Retirement Program, including preparation of a new Summary Plan Description (as required by law) for your employees and preparation of the necessary transfer paperwork for you to sign and deliver to your current plan provider notifying them of your plan’s conversion.
Is there additional work to administer a New Comparability plan?
Although New Comparability plans involve added administrative work, the ADA Members Retirement Program will assist you with it. Plus, the ADA Members Retirement Program provides these services for New Comparability plans at the same cost as our traditional Profit-Sharing or 401(k) plans.
How do New Comparability plans meet the IRS nondiscriminatory requirements?
The IRS allows the plan to divide plan participants into two or more designated groups, and in many cases, the plan can make much larger contributions for one group — those closest to retirement — than for another. Then the groups are tested to show that the benefits provided to highly and non-highly compensated employees are not discriminatory. The ADA Members Retirement Program does the complex mathematics required yearly for determining plan contributions and testing them to make sure the benefits are nondiscriminatory.
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"AXA" is the brand name for the AXA Equitable Financial Services, LLC family of companies, including AXA Equitable Life Insurance Company. AXA S.A. is a French holding company for a group of international insurance and financial services companies, including AXA Equitable Financial Services, LLC. The obligations of AXA Equitable Life Insurance Company are backed solely by its claims-paying ability.
The ADA Members Retirement Program (Contract Form #5108) is funded by a group variable annuity contract issued and distributed by AXA Equitable Life Insurance Company (New York, NY 10104, 212-314-4600).
Please consider the charges/ risks/ expenses/ and investment objectives carefully before purchasing a variable annuity. For a prospectus containing this and other information please contact a financial professional. Read it carefully before you invest or send money.
A group variable annuity is a long-term financial product designed for retirement purposes. In essence, a group variable annuity is a contractual agreement in which payment(s) are made to an insurance company on behalf of retirement plan participants, which agrees to payout an income or a lump sum amount at a later date to those participants. There are contract limitations and fees and charges associated with group variable annuities, which include, but are not limited to administrative fees and charges for investment management. Amounts in the annuity's variable investment options are subject to fluctuation in value and market risk, including loss of principal. Withdrawals from annuities are subject to an additional 10% federal income tax penalty. Withdrawals may also be subject to a contractual withdrawal charge. Contact a Retirement Program Specialist for costs and complete details. An annuity contract that is purchased to fund a retirement plan should be done so for the annuity's features and benefits other than tax deferral. For such cases, tax deferral is not an additional benefit. You may also want to consider the relative features, benefits, and costs of this annuity with any other investment that you may have in connection with your retirement plan or arrangement.
Please be advised that this document is not intended as legal or tax advice. Accordingly, any tax information provided in this document is not intended or written to be used, and cannot be used, by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. The tax information was written to support the promotion or marketing of the transaction(s) or matter(s) addressed and you should seek advice based on your particular circumstances from an independent tax advisor.