Profit-Sharing Plan


DEFINITION of 'Profit-Sharing Plan'

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.

  1. Cash Or Deferred Arrangement - ...

    The method of funding any type of qualified profit-sharing or ...
  2. Option

    A financial derivative that represents a contract sold by one ...
  3. Qualified Retirement Plan

    A plan that meets requirements of the Internal Revenue Code and ...
  4. Annual Addition

    The total dollar amount contributed in a given year to a participant's ...
  5. Collective Investment Fund

    A fund that is operated by a trust company or a bank and handles ...
  6. W-2 Form

    The W-2 form reports an employee's annual wages and the amount ...
Related Articles
  1. Professionals

    Top 10 Airlines to Work For in 2015

    Find out why Southwest Airlines and JetBlue lead the list of the top airlines to work for in 2015.
  2. Retirement

    Job Hunting: Higher Pay Vs. Better Benefits

    Focusing on salary may be a mistake. Find out which benefits have the highest long-run payoff.
  3. Retirement

    The Investing Risk Of Underfunded Pension Plans

    Determine the risk to a company's EPS and financial condition resulting from an underfunded pension plan.
  4. Entrepreneurship

    Is An ESOP Right For Your Business?

    Discover how to transfer your company's net worth to the next generation of entrepreneurs.
  5. Options & Futures

    A Guide To CEO Compensation

    Make sure you assess whether a CEO has a stake in doing a good job for you, the shareholder.
  6. Entrepreneurship

    401(k) Plans For The Small Business Owner

    If you own a business, this may be the plan for you! Find out about its benefits and eligibility requirements.
  7. Taxes

    Learn about eligibility requirements, contributions and distribution rules for these retirement plans.
  8. Markets

    What Is the Labor Market Conditions Index?

    The Labor Market Conditions Index is a new Fed indicator to track labor statistics. How useful is it?
  9. Professionals

    How To Hire and Retain An Overqualified Candidate

    Understand how to hire and retain overqualified candidates by proactively seeking them out, discerning their motivations and then offering what they want.
  10. Entrepreneurship

    7 HR Basics for Small Businesses

    Whether or not you are a fan of human resources, every employer needs to know the answers to these questions.
  1. Are catch-up contributions included in the 415 limit?

    Unlike regular employee deferrals, catch-up contributions are not included in the 415 limit. While there is an annual limit ... Read Full Answer >>
  2. What's the average salary of a financial advisor?

    A financial advisor is a professional who is engaged in the business of advising clients about financial matters. "Financial ... Read Full Answer >>
  3. What types of plans allow catch-up contributions?

    Catch-up contributions can only be made to plans with salary deferral features. If you want to make catch-up contributions, ... Read Full Answer >>
  4. My company has three partners but plans to hire more this year. Would we be better ...

    It depends. The SBO-401(k) plan is suitable if the plan covers only the business owners - in this case, the partners in the ... Read Full Answer >>
  5. What is the difference between a Keogh and an IRA?

    The Keogh plan, or HR10, is an employer-funded, tax-deferred retirement plan designed for unincorporated businesses or self-employed ... Read Full Answer >>
  6. I have several jobs. Can I contribute the maximum to multiple employer retirement ...

    It depends. A question such as this requires detailed information in order to provide a helpful response. Here is a general ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Bar Chart

    A style of chart used by some technical analysts, on which, as illustrated below, the top of the vertical line indicates ...
  2. Bullish Engulfing Pattern

    A chart pattern that forms when a small black candlestick is followed by a large white candlestick that completely eclipses ...
  3. Cyber Monday

    An expression used in online retailing to describe the Monday following U.S. Thanksgiving weekend. Cyber Monday is generally ...
  4. Take A Bath

    A slang term referring to the situation of an investor who has experienced a large loss from an investment or speculative ...
Trading Center