Author Topic: Negotiating an Offer: 1k Extra for 401K match > or < 1k extra salary  (Read 7864 times)

Grid

  • Bristles
  • ***
  • Posts: 464
  • Age: 6
  • I kept dreaming of a world I thought I'd never see
Hypothetical question:  is an offer for $50k and an employer match of up to $6k into a 401k better than an offer for $49k and a match up to $7k if you were planning on maxing out your 401k?  Does this change if the salary is higher, say, $125k?
« Last Edit: May 13, 2015, 08:38:13 AM by Grid »

curler

  • Stubble
  • **
  • Posts: 111
At that point, I'd start looking at the other aspects of the job, what you would be doing, the commute, opportunities for growth etc. to figure out which one is better.

dandarc

  • Magnum Stache
  • ******
  • Posts: 3973
  • Age: 37
Generally speaking, you'll pay less taxes by moving that 1K from salary to the 401K.  The higher the income, the higher your marginal tax rate, so the more you save on taxes.  And by taking this part of your compensation in the 401K, you also avoid FICA (only applies to match - you pay FICA on your deferrals).

Just as an example, say the 49/50K salary puts you in the 15% bracket - having 1K in the 401K as employer match, rather than as salary saves you 15% + 7.65% = 22.65%, so $226.50 just in federal taxes.

At say 117/118 (chose this level because of the social security maximum wages), you might be in the 25% bracket.  Now you're saving 25% + 7.65% or 32.65% or $326.50 in federal taxes.

You'd want to run the numbers for your specific household, but generally, if you don't need the money today, more match in the 401K will save you on taxes compared to more salary.

[edit]clarified on the avoiding FICA thing[/edit]
« Last Edit: May 13, 2015, 08:52:55 AM by dandarc »

mrshudson

  • Stubble
  • **
  • Posts: 153
Scenario # 1: 50,000 gross, employer match up to 6,000.

Assuming: single taxpayer, maxing 401(k) at 18,000, the first 6,000 of which you are getting an employer match for.

Tax on $32000 (gross-401) = $4800,

Net pay = $28000

Take-home, if you add the 401(k) and match with net =  $52,000.

Assuming 7% returns, growth of 401(k) over a five year period (no one really stays at a same job for more than five years, it's either promotion and raises, or a different company, so this is a bit lame, but putting it here for comparison's sake) = $171,678.98

Scenario # 2: 49,000 gross, employer match up to 7,000.


Assuming: single taxpayer, maxing 401(k) at 18,000, the first 7,000 of which you are getting an employer match for.

Tax on $31000 (gross-401) = $4650,

Net pay = $26350

Take-home, if you add the 401(k) and match with net =  $51350.

Assuming 7% returns, growth of 401(k) over a five year period (no one really stays at a same job for more than five years, it's either promotion and raises, or a different company, so this is a bit lame, but putting it here for comparison's sake) = $178,809.27

At a difference of about 7 grand over a five year period, it's really a toss-up for me. So yes, I would focus on other aspects of the job, and not just on the compensation.

Edited to add: yes, the taxes I estimated don't factor in FICA, medicare, soc. security, etc. Nor does it include state taxes. But I still think it's too close to bother (to me, personally) fine tuning the above coarse estimate. If the additional $7000 over a five year period growing in a tax sheltered account seems meaningful to you, more power to you.
« Last Edit: May 13, 2015, 08:59:19 AM by mrshudson »

Grid

  • Bristles
  • ***
  • Posts: 464
  • Age: 6
  • I kept dreaming of a world I thought I'd never see
Thanks dandarc.  It seems counterintuitive given the general idea of focusing on salary as the main aspect of an offer, but I will keep that in mind. 

curler, I'm working with two companies, but I wanted a specific spot I should focus on when negotiating with the one company.  The 401k matching policy may or may not be negotiable, unfortunately, but it is one benefit that differs greatly between the two.

Jeremy E.

  • Handlebar Stache
  • *****
  • Posts: 1947
  • Location: Lewiston, ID
Scenario # 1: 50,000 gross, employer match up to 6,000.

Assuming: single taxpayer, maxing 401(k) at 18,000, the first 6,000 of which you are getting an employer match for.

Tax on $32000 (gross-401) = $4800,

Net pay = $28000

Take-home, if you add the 401(k) and match with net =  $52,000.

Assuming 7% returns, growth of 401(k) over a five year period (no one really stays at a same job for more than five years, it's either promotion and raises, or a different company, so this is a bit lame, but putting it here for comparison's sake) = $171,678.98

Scenario # 2: 49,000 gross, employer match up to 7,000.


Assuming: single taxpayer, maxing 401(k) at 18,000, the first 7,000 of which you are getting an employer match for.

Tax on $31000 (gross-401) = $4650,

Net pay = $26350

Take-home, if you add the 401(k) and match with net =  $51350.

Assuming 7% returns, growth of 401(k) over a five year period (no one really stays at a same job for more than five years, it's either promotion and raises, or a different company, so this is a bit lame, but putting it here for comparison's sake) = $178,809.27

At a difference of about 7 grand over a five year period, it's really a toss-up for me. So yes, I would focus on other aspects of the job, and not just on the compensation.

Edited to add: yes, the taxes I estimated don't factor in FICA, medicare, soc. security, etc. Nor does it include state taxes. But I still think it's too close to bother (to me, personally) fine tuning the above coarse estimate. If the additional $7000 over a five year period growing in a tax sheltered account seems meaningful to you, more power to you.
These numbers aren't quite right, take into consideration that there is a standard deduction, and also that part of his money will be in a 10% bracket as well. The extra 1k in 401k match will be a very slight advantage IF you always put at least enough to max there match EVERY year, but it will only be a slight difference. Good luck either way!

Grid

  • Bristles
  • ***
  • Posts: 464
  • Age: 6
  • I kept dreaming of a world I thought I'd never see
And wow, mrshudson, thanks as well.  Of course the extra $7k (or whatever the true number is) in your example is important - that's $7k closer to financial independence.

dandarc

  • Magnum Stache
  • ******
  • Posts: 3973
  • Age: 37
Usually the 401K match is not negotiable because by law, the employer has to treat all employees equally.  Is certainly something to consider when comparing 2 employers with different plans though.  As others have mentioned, it is but one piece of the puzzle, though - if all the other salary and benefits considerations are exactly the same, I'd be surprised.

Grid

  • Bristles
  • ***
  • Posts: 464
  • Age: 6
  • I kept dreaming of a world I thought I'd never see
Usually the 401K match is not negotiable because by law, the employer has to treat all employees equally.  Is certainly something to consider when comparing 2 employers with different plans though.  As others have mentioned, it is but one piece of the puzzle, though - if all the other salary and benefits considerations are exactly the same, I'd be surprised.

They definitely won't be, as the businesses are in different parts of the country even, but it's at least a good hurdle to have cleared when considering how valuable a match is from a tax perspective.  So thanks for the help.

dandarc

  • Magnum Stache
  • ******
  • Posts: 3973
  • Age: 37
Because I just can't resist laying out the numbers (assuming single, no kids or odd deductions):

50K Salary / 6K Match49K Salary / 7K MatchTax Difference
Gross Salary5000049000
401K18000180000
401K Match600070000
AGI3200031000
Standard Deduction63006300
Exemption40004000
Taxable Income2170020700
Income Tax2793.752643.75150
Payroll Taxes38253748.576.5
Net Pay25381.2524607.75
MMM Take-Home49381.2549607.75
Per year in 401K2400025000
2 year(7%)4968051750
5 year(7%)138017.7362143768.4753
10 year(7%)331594.7511345411.199
20 year(7%)983891.81571024887.308

[edit]fixed error in "MMM Take Home" formula[/edit]
« Last Edit: May 13, 2015, 09:30:12 AM by dandarc »

Murse

  • Pencil Stache
  • ****
  • Posts: 555
Scenario # 1: 50,000 gross, employer match up to 6,000.

Assuming: single taxpayer, maxing 401(k) at 18,000, the first 6,000 of which you are getting an employer match for.

Tax on $32000 (gross-401) = $4800,

Net pay = $28000

Take-home, if you add the 401(k) and match with net =  $52,000.

Assuming 7% returns, growth of 401(k) over a five year period (no one really stays at a same job for more than five years, it's either promotion and raises, or a different company, so this is a bit lame, but putting it here for comparison's sake) = $171,678.98

Scenario # 2: 49,000 gross, employer match up to 7,000.


Assuming: single taxpayer, maxing 401(k) at 18,000, the first 7,000 of which you are getting an employer match for.

Tax on $31000 (gross-401) = $4650,

Net pay = $26350

Take-home, if you add the 401(k) and match with net =  $51350.

Assuming 7% returns, growth of 401(k) over a five year period (no one really stays at a same job for more than five years, it's either promotion and raises, or a different company, so this is a bit lame, but putting it here for comparison's sake) = $178,809.27

At a difference of about 7 grand over a five year period, it's really a toss-up for me. So yes, I would focus on other aspects of the job, and not just on the compensation.

Edited to add: yes, the taxes I estimated don't factor in FICA, medicare, soc. security, etc. Nor does it include state taxes. But I still think it's too close to bother (to me, personally) fine tuning the above coarse estimate. If the additional $7000 over a five year period growing in a tax sheltered account seems meaningful to you, more power to you.
I thought that the employee contribution max was 18k and that the employer could contribute too. So 18k+6k vs 18k+7k in the 401k is what we are talking about?

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4006
  • Age: 37
  • Location: Madison Heights, Michigan
Usually the 401K match is not negotiable because by law, the employer has to treat all employees equally.  Is certainly something to consider when comparing 2 employers with different plans though.  As others have mentioned, it is but one piece of the puzzle, though - if all the other salary and benefits considerations are exactly the same, I'd be surprised.

This is what I have found too (despite many members here claiming it is possible).  I have been stonewalled and told it's flat out illegal to give preferential treatment to some employees (ie putting more money into your 401k than any other employees for any reason).

Money that your employer puts into your 401k avoids FICA (for you and the employer) and does not count towards your personal contribution limit of $18k.  You will always come out ahead by having your employer contribute to your 401k instead of giving it to you as salary.  Unless you aren't maxing out your IRA because you don't have enough salary, then that money might be better off going into a low cost vanguard IRA instead of a shitty 401k, but then you'd also have to pay FICA tax (7.65%) on that money in order to be able to place it in an IRA.

beltim

  • Magnum Stache
  • ******
  • Posts: 2964
Money that your employer puts into your 401k avoids FICA (for you and the employer) and does not count towards your personal contribution limit of $18k.  You will always come out ahead by having your employer contribute to your 401k instead of giving it to you as salary.  Unless you aren't maxing out your IRA because you don't have enough salary, then that money might be better off going into a low cost vanguard IRA instead of a shitty 401k, but then you'd also have to pay FICA tax (7.65%) on that money in order to be able to place it in an IRA.

Well... you're only counting one side of the balance sheet here.  It seems to me that if you're including FICA tax on one side, to be intellectually honest you should include Social Security benefits on the other side.  At the 50k salary level that can be significant, although there are a ton of potential variables here.

beltim

  • Magnum Stache
  • ******
  • Posts: 2964
For example, consider someone who made $50k annually in constant dollars during a 35-year career.  The last $1,000 of salary cost them $76.50 in FICA taxes (this includes Medicare, but I think that's fair).  And that $76.50 bought them $9.14 every year starting at full retirement age.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4006
  • Age: 37
  • Location: Madison Heights, Michigan
Money that your employer puts into your 401k avoids FICA (for you and the employer) and does not count towards your personal contribution limit of $18k.  You will always come out ahead by having your employer contribute to your 401k instead of giving it to you as salary.  Unless you aren't maxing out your IRA because you don't have enough salary, then that money might be better off going into a low cost vanguard IRA instead of a shitty 401k, but then you'd also have to pay FICA tax (7.65%) on that money in order to be able to place it in an IRA.

Well... you're only counting one side of the balance sheet here.  It seems to me that if you're including FICA tax on one side, to be intellectually honest you should include Social Security benefits on the other side.  At the 50k salary level that can be significant, although there are a ton of potential variables here.

I usually disregard it because I don't include ss in my retirement calculations.  I figure most mustachians are going to retire early enough that it probably doesn't need to be factored into their calculations.  Besides if you really do want to include it and make an apples to apples comparison you would have to take that additional FICA tax you saved and invest it.  SS is a terrible return on investment and you will still come out ahead by investing that money yourself.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4006
  • Age: 37
  • Location: Madison Heights, Michigan
Perhaps if you are in your mid sixties and your contribution to ss will net you a near immediate benefit you can start collecting on in the next few years it might make sense.  If you are decades away though I would opt to invest that money myself.

beltim

  • Magnum Stache
  • ******
  • Posts: 2964
I usually disregard it because I don't include ss in my retirement calculations.  I figure most mustachians are going to retire early enough that it probably doesn't need to be factored into their calculations. 
Agreed.  But for people who retire after, say, 50, it's a major factor.

Quote
Besides if you really do want to include it and make an apples to apples comparison you would have to take that additional FICA tax you saved and invest it.  SS is a terrible return on investment and you will still come out ahead by investing that money yourself.
My point is what the comparisons above are doing aren't including enough - see dandarc's post where he compares investing 24k per year versus 25k per year.  The proper comparison should be 25k per year in a 401k vs. 24k in 401k, 922.50 in IRA, and Social Security.

As for Social Security being a terrible investment, it depends on your income.  For very high income individuals, sure.  For medium-high income individuals, it's comparable to intermediate bonds.  For low income individuals, it's an amazing return on investment.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4006
  • Age: 37
  • Location: Madison Heights, Michigan
I usually disregard it because I don't include ss in my retirement calculations.  I figure most mustachians are going to retire early enough that it probably doesn't need to be factored into their calculations. 
Agreed.  But for people who retire after, say, 50, it's a major factor.

Quote
Besides if you really do want to include it and make an apples to apples comparison you would have to take that additional FICA tax you saved and invest it.  SS is a terrible return on investment and you will still come out ahead by investing that money yourself.
My point is what the comparisons above are doing aren't including enough - see dandarc's post where he compares investing 24k per year versus 25k per year.  The proper comparison should be 25k per year in a 401k vs. 24k in 401k, 922.50 in IRA, and Social Security.

As for Social Security being a terrible investment, it depends on your income.  For very high income individuals, sure.  For medium-high income individuals, it's comparable to intermediate bonds.  For low income individuals, it's an amazing return on investment.

I will have to see some more numbers to convince me of this.  The numbers I have seen show an abysmal rate of return on ss taxes across the board regardless of your income. 

beltim

  • Magnum Stache
  • ******
  • Posts: 2964
As for Social Security being a terrible investment, it depends on your income.  For very high income individuals, sure.  For medium-high income individuals, it's comparable to intermediate bonds.  For low income individuals, it's an amazing return on investment.

I will have to see some more numbers to convince me of this.  The numbers I have seen show an abysmal rate of return on ss taxes across the board regardless of your income.

http://www.reuters.com/article/2012/10/18/us-column-miller-socialsecurity-idUSBRE89H0YG20121018
http://www.ssa.gov/oact/NOTES/ran5/an2004-5.html
and a more recent one:
http://www.ssa.gov/policy/docs/issuepapers/ip2009-02.html
« Last Edit: May 13, 2015, 12:06:04 PM by beltim »

dandarc

  • Magnum Stache
  • ******
  • Posts: 3973
  • Age: 37
My point is what the comparisons above are doing aren't including enough - see dandarc's post where he compares investing 24k per year versus 25k per year.  The proper comparison should be 25k per year in a 401k vs. 24k in 401k, 922.50 in IRA, and Social Security.

As for Social Security being a terrible investment, it depends on your income.  For very high income individuals, sure.  For medium-high income individuals, it's comparable to intermediate bonds.  For low income individuals, it's an amazing return on investment.
Good point - OP didn't specify also maxing a T-IRA, the income tax savings actually are irrelevant to the discussion, since OP could put that extra take-home pay into a T-IRA and get the same tax treatment.  My bad.

beltim

  • Magnum Stache
  • ******
  • Posts: 2964
My point is what the comparisons above are doing aren't including enough - see dandarc's post where he compares investing 24k per year versus 25k per year.  The proper comparison should be 25k per year in a 401k vs. 24k in 401k, 922.50 in IRA, and Social Security.

As for Social Security being a terrible investment, it depends on your income.  For very high income individuals, sure.  For medium-high income individuals, it's comparable to intermediate bonds.  For low income individuals, it's an amazing return on investment.
Good point - OP didn't specify also maxing a T-IRA, the income tax savings actually are irrelevant to the discussion, since OP could put that extra take-home pay into a T-IRA and get the same tax treatment.  My bad.

No worries.  Another possibility is the OP is maxing out a T-IRA, in which case the income tax savings are relevant, in which case the proper comparison would be the extra amount in a taxable account.

Ultimately, there are a ton of possibilities.

FrugalSpendthrift

  • Stubble
  • **
  • Posts: 210
Usually the 401K match is not negotiable because by law, the employer has to treat all employees equally.  Is certainly something to consider when comparing 2 employers with different plans though.  As others have mentioned, it is but one piece of the puzzle, though - if all the other salary and benefits considerations are exactly the same, I'd be surprised.

This is what I have found too (despite many members here claiming it is possible).  I have been stonewalled and told it's flat out illegal to give preferential treatment to some employees (ie putting more money into your 401k than any other employees for any reason).
Aside from the matching contribution, the employer can make profit-sharing contributions that allow some discretion with how they are allocated, but there are still nondiscrimination tests that the plan has to meet.  It isn't really something that an employer can negotiate with the employee, because if the plan fails the testing then they have to make changes. 

dandarc

  • Magnum Stache
  • ******
  • Posts: 3973
  • Age: 37
And the extra amount to IRA would be 908.82 in the 15% bracket - because you do have to pay that FICA tax, you don't have quite the full 1,000 to work with, so there is some tax that you can't shelter away that you could if this 1K was a match.

extra mount of pay after taking into account FICA = amount you can put into IRA + extra income tax that you can't shelter on the full amount.

922.50 = IRA + (1000 - IRA) * .15

922.50 = .85 * IRA + 150.00

772.50 = .85 * IRA

IRA = 772.50 / .85 ~= 908.82

If we're talking 25% tax bracket, I get 896.67 by this math.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4006
  • Age: 37
  • Location: Madison Heights, Michigan
Usually the 401K match is not negotiable because by law, the employer has to treat all employees equally.  Is certainly something to consider when comparing 2 employers with different plans though.  As others have mentioned, it is but one piece of the puzzle, though - if all the other salary and benefits considerations are exactly the same, I'd be surprised.

This is what I have found too (despite many members here claiming it is possible).  I have been stonewalled and told it's flat out illegal to give preferential treatment to some employees (ie putting more money into your 401k than any other employees for any reason).
Aside from the matching contribution, the employer can make profit-sharing contributions that allow some discretion with how they are allocated, but there are still nondiscrimination tests that the plan has to meet.  It isn't really something that an employer can negotiate with the employee, because if the plan fails the testing then they have to make changes.

This is what I have been told from people on this board, but that is not what the 401k rep told me.  I was told in no uncertain terms that what you are describing is flat out illegal.  It's not a matter of failing nondiscrimination testing, it's just flat out illegal and specifically not allowed.  I spoke with multiple reps at the 401k company and they kept repeating the same thing.  If you have profit sharing it must be distributed equally to all employees, absolutely no amount of discrimination for any reason is allowed.  Either some people on this board are flat out wrong with their interpretation of the 401k rules, or the administrator of our 401k plan is wrong. 

I don't know who is right, i'm just letting you all know what i've been told.  I tried to push the issue last year as a way to circumvent the max allowable 401k contributions (ie if I get employer contributions instead of an actual raise I could effectively get more into my 401k) after reading a thread where cheddar stacker did the same.  I got stonewalled and had to take my raise as a regular raise instead of a 401k employer contribution. 

boarder42

  • Walrus Stache
  • *******
  • Posts: 7845
this may have been answered already but companies have to offer the exact same 401k plans to everyone meaning you cant get an extra match.

FrugalSpendthrift

  • Stubble
  • **
  • Posts: 210
Usually the 401K match is not negotiable because by law, the employer has to treat all employees equally.  Is certainly something to consider when comparing 2 employers with different plans though.  As others have mentioned, it is but one piece of the puzzle, though - if all the other salary and benefits considerations are exactly the same, I'd be surprised.

This is what I have found too (despite many members here claiming it is possible).  I have been stonewalled and told it's flat out illegal to give preferential treatment to some employees (ie putting more money into your 401k than any other employees for any reason).
Aside from the matching contribution, the employer can make profit-sharing contributions that allow some discretion with how they are allocated, but there are still nondiscrimination tests that the plan has to meet.  It isn't really something that an employer can negotiate with the employee, because if the plan fails the testing then they have to make changes.

This is what I have been told from people on this board, but that is not what the 401k rep told me.  I was told in no uncertain terms that what you are describing is flat out illegal.  It's not a matter of failing nondiscrimination testing, it's just flat out illegal and specifically not allowed.  I spoke with multiple reps at the 401k company and they kept repeating the same thing.  If you have profit sharing it must be distributed equally to all employees, absolutely no amount of discrimination for any reason is allowed.  Either some people on this board are flat out wrong with their interpretation of the 401k rules, or the administrator of our 401k plan is wrong. 

I don't know who is right, i'm just letting you all know what i've been told.  I tried to push the issue last year as a way to circumvent the max allowable 401k contributions (ie if I get employer contributions instead of an actual raise I could effectively get more into my 401k) after reading a thread where cheddar stacker did the same.  I got stonewalled and had to take my raise as a regular raise instead of a 401k employer contribution.
Tiered profit sharing is certainly not illegal, but they have to meet specific requirements to remain qualified by the IRS.  Your company could have a lot of different reasons that they don't want to change their plan, so I'm not surprised that you were stonewalled.  It's also not a way to offer a raise, it is just profit sharing.  If profit drops, then profit sharing drops.  They can't guarantee a certain level to you without affecting the amount of benefit to everyone within the same group.  I don't know how big your company is or where you fit within it, but a new comparability plan tends to benefit small business owners and their key employees.

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4006
  • Age: 37
  • Location: Madison Heights, Michigan
Usually the 401K match is not negotiable because by law, the employer has to treat all employees equally.  Is certainly something to consider when comparing 2 employers with different plans though.  As others have mentioned, it is but one piece of the puzzle, though - if all the other salary and benefits considerations are exactly the same, I'd be surprised.

This is what I have found too (despite many members here claiming it is possible).  I have been stonewalled and told it's flat out illegal to give preferential treatment to some employees (ie putting more money into your 401k than any other employees for any reason).
Aside from the matching contribution, the employer can make profit-sharing contributions that allow some discretion with how they are allocated, but there are still nondiscrimination tests that the plan has to meet.  It isn't really something that an employer can negotiate with the employee, because if the plan fails the testing then they have to make changes.

This is what I have been told from people on this board, but that is not what the 401k rep told me.  I was told in no uncertain terms that what you are describing is flat out illegal.  It's not a matter of failing nondiscrimination testing, it's just flat out illegal and specifically not allowed.  I spoke with multiple reps at the 401k company and they kept repeating the same thing.  If you have profit sharing it must be distributed equally to all employees, absolutely no amount of discrimination for any reason is allowed.  Either some people on this board are flat out wrong with their interpretation of the 401k rules, or the administrator of our 401k plan is wrong. 

I don't know who is right, i'm just letting you all know what i've been told.  I tried to push the issue last year as a way to circumvent the max allowable 401k contributions (ie if I get employer contributions instead of an actual raise I could effectively get more into my 401k) after reading a thread where cheddar stacker did the same.  I got stonewalled and had to take my raise as a regular raise instead of a 401k employer contribution.
Tiered profit sharing is certainly not illegal, but they have to meet specific requirements to remain qualified by the IRS.  Your company could have a lot of different reasons that they don't want to change their plan, so I'm not surprised that you were stonewalled.  It's also not a way to offer a raise, it is just profit sharing.  If profit drops, then profit sharing drops.  They can't guarantee a certain level to you without affecting the amount of benefit to everyone within the same group.  I don't know how big your company is or where you fit within it, but a new comparability plan tends to benefit small business owners and their key employees.

It's a small company with about 10 employees.  It was not the company that stonewalled me though, it was the 401k administrator.  I tried telling them about cheddar stacker and a few others here that have mentioned profit sharing as a means to get more into their 401k and was told it was illegal.  I tried to get clarification that they meant it was illegal under our current plan and they said no, it's flat out illegal under all 401k plans and all the scenarios I described to her that were being implement by mustachians was illegal.  She said we could change to a profit sharing plan to partake in profit sharing, but the profits had to be distributed equally among all employees.