Profit-sharing Plan
Definition of "Profit-sharing plan"
Arrangement by an employer in which employees share in profits of the business. To be a qualified plan, a predetermined formula must be used to determine contributions to the plan and benefits to be distributed, once a participant attains a specified age, becomes ill or disabled, severs employment, retires, or dies. When a profit-sharing plan is first installed, employees with considerable past service usually do not receive such credit. An advantage to an employer is that in low or no profit years, the business does not have to contribute to the plan, since contributions are voluntary and the Internal Revenue Code does not require a minimum contribution, as with a deferred benefit plan or a money purchase plan.
Popular Insurance Terms
Conversion of form of ownership from a mutual insurance company to a stock insurance company. Interest in demutualization of life insurance companies surged in the early 1980s among many ...
Trust in which the trustee distributes capital and income to the beneficiaries of the trust according to their economic needs. ...
Procedure for accumulating, conserving, and distributing personal wealth. In essence, estate planning focuses on enhancement of the value of an estate and its conservation. At the death of ...
Factor applied in retrospective rating in order to increase the basic premium to cover state premium taxes for liability and workers compensation insurance. For example, if a state premium ...
Nonparticipating life insurance under which the first few annual premiums are smaller than would be the case under a traditional nonparticipating policy. While the maximum amount of these ...
actual fire losses divided by the total value of the property exposed to the peril of fire; actual losses resulting from fire divided by the total fire amount of in-force business. ...
Situation in which several liability insurance policies are in force to cover the same risk, thereby resulting in higher limits of coverage than is required to adequately insure the risk. ...
Buy or sell order for security that expires at the end of the trading date on which it was entered if not executed. ...
Insurance coverage purchased on the same item from two or more insurance companies. ...
Have a question or comment?
We're here to help.