profit-sharing plan

Profit-Sharing Plan

A plan that gives employees a share in the profits of the company. Each employee receives into an account, a percentage of those profits based on their earnings. Also known as "deferred profit-sharing plan" or "DPSP".

Notes:

This is a great way to give employees a sense of ownership in the company. The company decides what portion of the profit will be shared. And there are typically restrictions as to when and how you can withdraw these funds without penalties.

See also: Stock Options, Qualified Plan

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Profit-sharing plan

An incentive system providing that employees share in companys profits through a cash fund or a deferred plan used to buy stock or bonds.

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profit-sharing plan

A savings plan offered by many firms to their employees in which a part of the firm's profits is funneled into a tax-deferred employee retirement account. These plans give employees additional incentive to be productive.