Salary Ratio Allocation Method


The salary ratio plan is the simplest of the four allocation methods. It is designed to allocate employer contributions to all participants in proportion to their compensation. (Example, if Mr. Owner's compensation is 60% of the total compensation of the eligible group, Mr. Owner will get 60% of the profit sharing contribution). The limit for each employee is the lesser of 100% of pay or $58,000 (2021 - indexed).