Originally Posted by Martha
I'll try to answer some of your questions. Our office has a total of about 70 employees. We put the profit sharing and 401(k) into one pot, so it doesn't look like separate plans to employees.
Since we put the plan in place when I was in managment, I hired for myself a new secretary who was an older woman. I value her experience. Didn't even think about the issue that she will work into a higher profit sharing contribution quicker because she was older. Didn't think about health insurance. Would be highly inappropriate in any event. Instead, I worried about the ability to pay her enough to come.
In any event, we designed the plan to put as much pretax dollars away for owners as possible. As a result, every employee gets a decent profit sharing contribution. But those costs are less than the tax savings to owners.
I was under the impression that you were not allowed to do a 401k and pre-tax profit share at the same time. I'll have to give my agent a call. We just do a simple IRA with company match right now. I did start looking into a pretax profit share. Doubt my investors will go for it but never hurts to try.
I've got 16 employees in a small hi-tech manufacturing business and while we have never considered age an issue over skills (mostly advanced degree types here) I will assure you that most businesses on the manufacturing side, especially those with low margins, feel the heat big time.
I have to set all pay, health and tax deferred benefits to get great people in and keep them motivated, then pay for capital improvements and inventory, then hope we hustle enough business not only to pay for it all, but grow it all profitably to keep the investors happy. That's all after raising-spending some serious $ just to develop a product. I guess I see it from a slightly different angle than hiring a secratery. BTW two of our newest employees are also our oldest. No regrets whatsoever in spite of the hit to the health premium. Just don't put me in a room alone with the idiot who sets these demographic health benefit formulas.
Anyway Iím glad it works out well for your firm and I'll keep your formulas in mind.