Profit sharing portions of a 401K plan are required to allocate contributions to each participant in a nondiscriminatory method. New comparability is one type of allocation method that can be used. New comparability is favored by some business owners because, in the right scenarios, it can provide a way to maximize the owner’s annual contribution to the annual IRS limit while still passing compliance testing with lower contributions to non-highly compensated participants. For new comparability to function in favor of the owner, the average age of the owner(s) must be greater than the average age of the other employees. The greater the difference between the ages, the greater the allocation is in favor of the owner. New comparability is not based on set amounts for each participant, it first separates the participants into groups based on objective criteria, and from there each group is tested separately using the required compliance testing methods. Because these groups typically separate older and more highly compensated participants from younger and lower paid participants, each group passes testing with more favorable contribution amounts. There are multiple tests that a 401K plan with profit sharing will need to pass in order to maintain the qualified status. I think when you are talking about 5% to all non-highly compensated employees you may be thinking of the gateway test requirement. This requirement states that defined contribution plans must be designed to demonstrate that allocations are nondiscriminatory on a benefits basis, and each non-highly compensated employee that is eligible for a plan must receive at least 5% of their compensation in allocations. This normally is passed between deferrals, safe harbor matches and profit sharing. However, only 5% of allocations to each employee is not always enough to pass other compliance testing, especially when owners are working to maximize.