$siteURL="http://servername:10/"
$groupName="Custom Group"
$permissionLevel="Contribute"
$description="My custom Group using powershell"
$site=Get-SPSite $siteURL
$web=$site.RootWeb
$newGroup=$web.SiteGroups.Add($groupName,$web.CurrentUser,$null,)
$group=$web.SiteGroups[$groupName]
$roleAssignment=New-Object Microsoft.SharePoint.SPRoleAssignment($group)
$roleDefinition=$web.RoleDefinitions[$permissionLevel]
$roleAssignment.RoleDefinitionBindings.Add($roleDefinition)
$web.RoleAssignments.Add($roleAssignment);
$web.Update()
$web.Dispose()
$site.Dispose()