New comparability plans allow plan sponsors to do what with participant contributions?

New comparability plans are designed to provide flexibility in the allocation of contributions to retirement plans, which is why allowing larger contributions to select participant groups is a hallmark feature of these plans. In a new comparability plan, the employer can categorize employees into different groups based on various criteria, such as job classification, age, or service, and then make varying contribution levels to these groups. This approach allows employers to enhance benefits for certain segments of their workforce, often those who are key employees or highly compensated individuals, while still meeting overall contribution limits set by retirement plan regulations.

This flexibility can serve multiple strategic purposes, such as enhancing employee retention and morale among key personnel or creating a more attractive benefits package for essential roles within the organization. The design supports the employer's goals while also remaining compliant with laws governing retirement plans, which is why it stands out compared to options that suggest equal distributions, limiting contributions to minimum requirements, or basing allocations solely on tenure.