Profit Sharing Offset:

For this example, assume you've contributed the fringe benefit portion of prevailing wages to The Contractors Plan. At year end, you decide to make a profit-sharing

contribution. In order to contribute the maximum allowed to the owners' retirement

accounts, nearly $21,700 would need to be contributed to NHCE accounts.

The Problem:

Profit Sharing Contribution without the offset:

10% of Compensation

The Fringe Solution

 Because you have already made contributions for prevailing wage employees, you only need to make the profit-sharing contribution to non-prevailing wage workers.

This option maximizes retirement benefits to workers who are unable to participate in conventional retirement plans — owners and key employees. In this example, the plan saves the employer nearly $18,000 in profit sharing contributions. This is in addition to the significant payroll burden savings realized by contributing the fringe portion of the prevailing wage to a bona fide benefit plan.

Profit Sharing Contribution with the offset:

10% of Compensation