Which of the following is true for qualified profit-sharing plans ...

By Investopedia Staff AAA
Q:
Which of the following is true for qualified profit-sharing plans?

a) Contributions from the corporation are taxable.
b) Employee benefits are predetermined.
c) Contributions are mandatory whether the firm is profitable or not.
d) All income from the plan's assets are not taxed until received.
e) All of these are true

A:

The correct answer is d

Corporate contributions are deductible to the firm. The benefits depend on the firm's profitability and the profitability of the investments made, and as the name implies, if the firm does not have any profits, there is nothing to share. For example, the firm is not required to make contributions in years when it is not even profitable itself.


Have a Financial Question?

RELATED FAQS

  1. The Shur-Gro variable annuity uses an AIR of 3% for those contract holders who are ...

    The correct answer is b. Any time the actual growth rate of the separate account exceeds the account’s AIR, the payment will ...
  2. Sometimes investment banking firms allocate shares of hot issues to the personal ...

    The correct answer is a) Spinning is the act of selling hot issues to the personal accounts of corporate officers which in ...
  3. Donald has been putting aside money for his retirement into a Roth IRA for six years.  Although ...

    The correct answer is A) In a Roth IRA, there is no required distribution date as there is in a traditional IRA.
  4. A 7-year, 6% coupon callable bond is currently trading at 96.25.  The ...

    Free info on financial certification exams including study guides, exam questions, and much more!
RELATED TERMS
  1. Series 79

    A examination to ensure a candidate is qualified to become a ...
  2. Research Analyst

    A person who prepares investigative reports on equity securities. ...
  3. Series 34

    An exam required for individuals seeking to engage in off-exchange ...
  4. Financial Advisor

    One who provides financial advice or guidance to customers for ...
  5. Series 23

    An exam offered by the Financial Industry Regulatory Authority ...
  6. Series 28

    An exam given by the Financial Industry Regulatory Authority ...

You May Also Like

Related Articles
  1. Professionals

    Should You Add A Securities License ...

Trading Center