An age-weighted profit sharing plan is a special form of a profit sharing plan. It uses both age and income as a basis for allocating employer contributions among the plan participants: the older the participant, the higher the participant's contribution percentage.
All of the requirements that apply to traditional profit sharing plans also apply to age-weighted profit sharing plans. An age-weighted profit sharing plan can have a discretionary formula and provide the employer with flexibility over the amount of contributions to be made each plan year.
Because age is a factor, this type of plan favors older employees who have fewer years until retirement than younger employees to accumulate sufficient retirement funds. Age-weighted profit sharing plans have now been largely replaced by New-Comparability profit sharing plans.