Profit-Sharing Plan

What is a 'Profit-Sharing Plan'

A profit-sharing plan is a plan that gives employees a share in the profits of the company. Each employee receives a percentage of those profits based on the company's earnings.

Also known as "deferred profit-sharing plan" or "DPSP."

BREAKING DOWN 'Profit-Sharing Plan'

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.

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RELATED FAQS
  1. I have a profit-sharing plan with my former employer. I am now trying to buy a home. ...

    Profit-sharing plans are retirement plans with companies that give employees a percentage of the company's earnings. A profit-sharing ... Read Answer >>
  2. I participate in a profit-sharing plan at work. If I retire at age 62, will I be ...

    The money in your profit-sharing account will be taxable when it is withdrawn from the account. You may leave the money in ... Read Answer >>
  3. Can I roll the funds in an SEP-IRA over to a profit-sharing plan or self-directed ...

    Yes. Funds can be rolled over from an SEP IRA to a profit-sharing plan, provided the plan document that governs the profit-sharing ... Read Answer >>
  4. Which of the following is true for qualified profit-sharing plans ...

    Free info on financial certification exams including study guides, exam questions, and much more! Read Answer >>
  5. Mike is a highly compensated employee of XYZ Company, his company has offered him ...

    The correct answer is b): One of the most common types of nonqualified retirement plans is the deferred compensation plan. ... Read Answer >>
  6. What is the best retirement plan option for a physician with her own practice, employees ...

    It is very unlikely that you will find a qualified plan or an IRA-based plan that will allow the employer to exclude other ... Read Answer >>
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