profit-sharing 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.

Profit Sharing

A plan by which an employer distributes a set percentage of the company's profits to its employees. Employers may distribute the portion of its profits immediately (that is, employees may receive what amounts to a bonus) or it may set up a series of accounts for employees and defer the profit sharing until employees retire. The idea behind profit sharing is to give employees an incentive to work for the company's profitability. See also: DPSO, ESOP.

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.
References in periodicals archive ?
While a profit-sharing plan is touted as a motivator of factory employees to do better, a study by University Research Center of 63 such plans indicates that for several reasons most plans are failures as motivators.
For example, 47 companies in our sample in 1988 had more than one ESOP and 71 had more than one profit-sharing plan.
America's first profit-sharing plan was introduced in 1794 at the New Geneva, PA, glass works by Albert Gallatin.
Under a profit-sharing plan, as a defined-contribution plan, benefits must be based solely on amounts contributed to the participant's account and attributable income, gains, expenses and losses.
But how could the largest trust company in Missouri take a small company's profit-sharing plan, put it in a single guaranteed investment contract from Executive Life, a company that was heavily invested in junk bonds, and wipe out the savings of people who had worked for Allied for years?
Thus, a plan sponsor whose profit-sharing plan includes a salary-deferral Sec.
In other words, profit-sharing plan designs that circumvent the compensation limit require mathematical demonstrations of nondiscrimination.
The 58-year-old Fowler, who was chairman and chief executive officer of Mercantile, is accused of manipulating a stock purchase that benefited him to the financial detriment of the profit-sharing plan.
Section 404(a)(3)(A)(i) allows employee/employer contributions to a profit-sharing plan of up to 15% of the employees wages capped by a total contribution limit of $30,000.
To maximize these contributions employers commonly offer "paired" plans, consisting of a money purchase pension plan (MPPP) and a profit-sharing plan.
J converts the MPPP into a profit-sharing plan that covers the same employees and contains the same vesting schedule.
According to the report, more than 56% of respondents offered two or more different types of plans, in many cases a defined benefit plan and either a 401(k) plan, a profit-sharing plan or an employee stock ownership plan.