Prevailing Wage Plans
Prevailing Wage Plans are specialized retirement plan solutions tailored for contractors working on government-funded projects. These plans support compliance with the Davis-Bacon Act and similar federal or state prevailing wage laws, which require employers to pay workers a combination of wages and fringe benefits when performing work on public works projects.
Instead of paying fringe benefits as additional taxable cash wages, employers can contribute the equivalent value to a qualified retirement plan on behalf of their employees. This strategy allows businesses to reduce payroll taxes—such as FICA, FUTA, and state unemployment insurance—while still meeting prevailing wage requirements. The result is a cost-efficient way to enhance employee benefits without increasing total labor costs.
Contributions made under a Prevailing Wage Plan can be structured as part of a standalone retirement plan or integrated into an existing 401(k) or Profit Sharing Plan. This flexibility allows employers to align the plan with their overall benefits strategy and maximize both employee engagement and long-term savings potential.
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