Qualified Retirement Plans Tend to Discriminate AGAINST the Highly Compensated?
The restrictions placed on qualified retirement plans strictly limit the size of the benefits that can be accrued for highly-compensated employees. When compared to the benefits provided to lower-paid employees, these limitations can produce a “reverse discrimination” effect that results in qualified retirement plans replacing an inadequate percentage of an owner’s or key employee’s pre-retirement income.
Eligible compensation that can be considered in applying these benefit or contribution limitations is capped at $265,000 in 2015 (as adjusted for inflation).
There is, however, a solution to the inadequacy of qualified retirement plan benefits for owners and key employees…a selective executive benefit plan can be used to counter the “reverse discrimination” effects of a qualified retirement plan!
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