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.
As a result, the typical profit-sharing plan offered to workers in the 1980's is significantly different from that offered 40 years ago.
Typically, clients set up a defined contribution profit-sharing plan, or amend an existing profit-sharing plan, with language that allows for:
The allocation of the contribution to a participant's account in a profit-sharing plan is a two-step process.
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.
This forced the plan sponsor who wanted to cap out at 25% of pay to offer either only a money purchase plan, or pair a 15% profit-sharing plan with a 10% money purchase plan.
Louis last month settled a 1992 suit involving Executive Life contracts of their own, which had made up the majority of their company profit-sharing plan.
Another example of how we close the circle with quality at Alcoa is the profit-sharing plan we instituted in cooperation with members of our three major unions - the steel workers, aluminum workers, and auto workers.
For business entities with a profit-sharing plan, the plan trustee can be authorized to purchase life insurance with the monies in one owner's or partner's segregated profit-sharing account on another co-owner's life.
Thus, at the maximum cost of an additional 2% of compensation, the employer may implement a very powerful, actuarially driven profit-sharing plan, while eliminating many Sec.
Fowler of Jonesboro and other unnamed individuals by the trustee of a bank profit-sharing plan now controlled by Union Planters Corp.