If your company is part of a controlled group, profit-sharing contributions work a bit differently. Because the Internal Revenue Service (IRS) treats all related entities in a controlled group as a single entity, we need to calculate and process allocations across every plan in the group. This article explains how profit sharing works for controlled groups and how to submit a contribution request.
Under Internal Revenue Service (IRS) rules, all related entities in a controlled group are treated as a single entity for employee benefits. This includes profit-sharing contributions, which are pre-tax contributions you can make to your employees' retirement accounts after the end of the year.
If your company is part of a controlled group and you want to make a profit-sharing contribution, we need to calculate and process the allocation for all eligible employees across every plan in your controlled group.
To get started, send an email or form submission to our Sponsor Support team. Include the following details:
A subject line of "Controlled group profit sharing"
The trustee for each plan on the email, especially if different plans have different trustees
The Gusto Retirement plan IDs for each plan in your controlled group
Your preferred withdrawal date (allow at least two weeks from the date of your request, so we have time to generate a projection for your review)
The allocation amount you'd like to contribute based on your plan's profit-sharing type (if you're not sure which profit-sharing formula your plan uses, go to the Settings page of your administrator dashboard to check. You can also learn more about profit-sharing formulas.)
Pro-rata — Allocates the profit share based on employees' relative salaries. Provide one of the following:
The percent to allocate per employee based on their relative salaries (preferred)
The total dollar amount of the overall profit-sharing contribution
Flat dollar — Every employee gets the same contribution amount. Provide one of the following:
The dollar amount to allocate per employee
The total dollar amount of the overall profit-sharing contribution
New comparability — Allows a greater disparity of contributions between different groups of employees. Select one of the following options:
Maximize contributions for the oldest owner
Maximize contributions for all owners (older owners get a higher contribution)
Maximize contributions for specific owner(s) (not weighted by age)
Give the same amount to all owners
After you submit your request, a client relationship manager will draft a projection of the allocations and reach out when it's ready for your review.
Important: Your profit-sharing contribution will not be processed until all plan trustees approve it. Once we get approval, we will process the allocations on your requested withdrawal date.