Why might Bill Dunston prefer an age-weighted profit sharing plan over other options?

• A. It allows for equal contributions regardless of age
• B. It benefits older employees more than younger ones
• C. It has fixed contribution requirements
• D. It provides guaranteed benefits for retirement

Answer: (B)

Bill Dunston may prefer an age-weighted profit sharing plan primarily because it benefits older employees more than younger ones. This type of plan is specifically designed to provide larger contributions to participants as they get older, acknowledging the importance of building retirement savings as one approaches retirement age.

An age-weighted profit sharing plan takes into account the age of the employees when determining how much the employer contributes to their retirement accounts. This means that older employees receive a higher percentage of contributions, which can be advantageous in helping them accumulate sufficient funds for retirement, especially if they are closer to retirement age and may not have as many years left to save.

Such a structure can also help with employee retention, as older employees may appreciate the tailored benefits and contributions that align with their retirement planning needs. This approach aligns with the goal of providing adequate retirement savings opportunities for those who may need to catch up on their savings as they near retirement age.