Deferred Profit-sharing


Definition of "Deferred profit-sharing"

Kishia Flaniken real estate agent
Kishia Flaniken, Real Estate Agent Drum Key Investments

Portion of company profits allocated by an employer, in good years, to an employee's trust. Contributions on behalf of each employee are expressed as a percentage of salary with 5% being common practice. If the profit sharing plan is a qualified plan according to the IRS, employer contributions are tax deductible as a business expense. These contributions are not currently taxable to the employee; benefits are taxed at the time of distribution.

 

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