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Apex PensionStrategiesand Fiduciary Services

WRITTEN BEFOREIT IS RUN.

Plan design is the choosing of a qualified plan’s eligibility, contribution, allocation and vesting provisions, and the writing of them into a plan document. Most sit on a pre-approved document; a few are drafted from scratch.

What follows is what each decision costs, who it favors, and when it can still be made.

A woman in a black blouse drafting notes by hand on a clipboard at a wooden table
The provisions, in writingPlan design 01 / 04
The design study
Eligibility
Who is in, and the date they are actually in.
  • Immediate
  • Age 21
  • One year of service
  • Monthly entry
  • Semi-annual entry
The contribution
How much the company puts in, on what formula, and to whom.
  • Discretionary profit sharing
  • Match
  • Safe harbor nonelective
  • Safe harbor match
Money out early
What can leave the plan before retirement, and on what terms.
  • Loans
  • Hardship
  • In-service
  • None
The payout
How a benefit is paid when somebody retires or leaves.
  • Lump sum
  • Installments
  • Annuity
Which plans run together
What each type covers that the others cannot.
  • 401(k)
  • Profit sharing
  • Cash balance
  • ESOP
Drafted from the censusTested before it is signed
Where every design starts

THE CENSUS IS THE BRIEF.

A design is modeled against the census you have: ages, pay, service and ownership, participant by participant. Until those numbers are on the table, every option is a theory.

The model shows three things at once: what an option puts in front of the owners, what it costs everybody else, and how it tests. A formula that doubles the owners’ share and then fails coverage has scheduled a refund, not designed a plan.

The constraint is rarely imagination. It is testing, and testing is arithmetic that can be run before a document is signed.

The legal and tax advice stays with your attorney and your CPA, and the investments are never ours to manage. We model what the rules allow, and we write the document that says so.

A woodturner's hands mark a turned part with a pencil at the lathe
The census is the briefAges · pay · service · ownership
The allocation formula

FOUR WAYS TO SPLIT
ONE CONTRIBUTION.

The formula decides who the plan actually pays. It is written into the document, not chosen again each spring.

Four allocation formulas, who each favors and what each costs.
FormulaWhat it does, who it favors, what it costs
Pro rataThe same percentage of pay for everyone

One rate, applied to every eligible participant’s compensation.

Favors
Nobody in particular. For a young workforce with a young owner, often the honest answer.
Costs
A dollar aimed at an owner brings the whole payroll with it at the same rate.
IntegratedA larger percentage above the Social Security wage base

Pay above the Social Security wage base, $184,500 for 2026, carries a higher rate.

Favors
Employees paid above the wage base, which in a small company usually means the owners.
Costs
Little. It sits inside a standard pre-approved document, and the rules cap the step-up.
Cross-testedAlso called new comparability

Groups, each with its own rate, tested on projected benefits at retirement rather than this year’s dollars.

Favors
An older owner. A dollar contributed at 58 has fewer years to grow than one at 28, which moves a materially larger share to an owner near retirement while the plan still passes.
Costs
A minimum allocation to everybody else, and a test re-run against each year’s census.
Safe harborA contribution that buys a pass

A required contribution, immediately vested, that buys a pass on the ADP test, on the ACP test when the match stays inside the safe harbor limits, and usually on the top-heavy minimum.

Favors
Owners and highly compensated employees, who can defer the full amount the law allows without waiting until March to learn how much they keep.
Costs
The contribution itself, every year it runs. The arithmetic is whether that beats the refunds and uncertainty it replaces.

A safe harbor notice is no longer required for a nonelective safe harbor, traditional or QACA. It is still required for a match design, and where a nonelective plan uses a match for the ACP safe harbor.

Why one plan is often two

COMBINATIONS.

A plan stops where a statute says it stops, and the ceilings do not move for the company with more to put away. A design out of room adds a layer with its own ceiling.

“Some of the above types may be mixed and matched to create a custom retirement plan solution.”

Apex Pension Strategies, Inc.

In practice: a cash balance plan over a 401(k), a profit-sharing formula over a match, an ESOP alongside the plan that covers everybody else.

The stack, and the ceiling each layer answers

  1. The pay a formula can see

    Every allocation is a percentage of compensation, and the plan stops counting pay at the year’s limit.

    $360,000401(a)(17) compensation limit, for 2026

  2. What the participant defers

    The employee’s own money, pre-tax or Roth, held back from each payroll.

    $24,500402(g) elective deferral limit, for 2026

  3. The years near the end

    Catch-up contributions, for participants who reach 50 during the year. They sit outside the ceiling above.

    $8,000Catch-up, age 50 and over, for 2026

    For ages 60 to 63 it is $11,250 for 2026, unchanged, and falls back to $8,000 at 64.

  4. What the company adds

    The match and the profit-sharing allocation, over the deferral. Everything credited to one participant in a year meets one ceiling.

    $72,000415(c) annual additions, for 2026

  5. The plan above the plan

    A second plan, with a ceiling of its own. That is the whole reason a design out of room adds a cash balance or defined benefit plan.

    $290,000415(b) annual benefit at retirement, for 2026

Every layer is subject to the plan’s terms and to testing. The stack is what the Code permits for 2026.

The calendar a design runs on

THE DATES A 2026 DESIGN
RUNS INTO.

Four of them, and they are not interchangeable. Two decide whether a safe harbor can still start this year. One is routinely quoted with the wrong date.

  1. October 1, 2026

    Latest effective date for a brand-new safe harbor 401(k) for a calendar-year plan.

    The consequence

    It has to run at least three months inside the plan year. Past this date the first safe harbor year is the next one.

  2. November 30, 2026

    Last day to add a 3% nonelective safe harbor for 2026, by amendment, to an existing plan.

    The consequence

    Miss it and the safe harbor is gone for the year. Being a day early costs nothing, which is why we work to this date and not the one convention quotes.

  3. December 31, 2026

    The SECURE, CARES and SECURE 2.0 amendment deadline for most non-governmental, non-collectively-bargained qualified plans.

    The consequence

    The extension the IRS granted in January 2026 covered IRA, SEP and SIMPLE IRA documents only. It did not move this date, and only the paperwork was ever deferred.

  4. September 30, 2028

    The end of Cycle 4 for pre-approved defined contribution documents, and the deadline to restate onto one.

    The consequence

    Widely misreported as December 31, 2026. A different deadline on a different document. Confusing the two is how a plan gets restated in a panic.

A hand wearing a steel watch resting on an open planner of handwritten dates and notes
Signed before the deadlineIts own document
A payroll rule with a design inside it

ADD ROTH, OR NOBODY GETS CATCH-UP.

For 2026, a participant whose 2025 Social Security wages from your company exceeded $150,000 must make catch-up contributions as Roth.

That provision has a sharp edge. Where it applies to anyone in the plan, nobody may make catch-up contributions unless every catch-up-eligible participant can make Roth ones. A plan that never added Roth decides this in 2026.

After the design is chosen

THE DOCUMENT BECOMES
THE INSTRUCTIONS.

Each provision becomes an instruction somebody follows for twelve months: entry dates applied to real hires, the formula allocated over real pay, notices sent on the schedule the design itself triggered.

Those same provisions are then the arithmetic of the tests, which is why the four disciplines stay in one file. The people who built the model are the people who run the plan.

An ESOP changes who owns the company, not only who is paid by it, and it needs an independent trustee on the participants’ side of the table.

Starting from no plan at all? Two short briefs cover the case for one: why a smaller company offers a 401(k) plan, and the SECURE 2.0 tax credits that may lower what an eligible small employer pays to start one.

Where the design goes next
Start the conversation

SEND US A CENSUS.

Send an employee census: ages, pay, service and ownership. We will model what the plan could do differently, and show what it would cost the company against what it delivers to the people it exists for. You will talk to the person who builds the model.

Call (770) 410-5022[email protected]
Send it to
PO Box 88208, Atlanta, GA 30356
Fax
(770) 410-5023
The entity
Apex Pension Strategies, Inc.
The downtown Atlanta skyline at dusk, towers lit by low evening sun
Where the census gets readAtlanta, Georgia · since 2003