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.
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.