Definition of "Profit-sharing plan"

Anitra Pope real estate agent

Written by

Anitra Popeelite badge icon

Long & Foster Moorestown

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.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Insurance Terms

Property damage, accident, or injury resulting from vagaries of nature, including tornadoes, hurricanes, and floods. ...

Monthly benefit payable to retired or disabled worker under Social Security. It is calculated by using the average monthly earnings of the covered person while working. Under this formula, ...

Policy under which the insurer will pay the actual cash value of the property at the time the property was damaged or destroyed provided the loss falls within the limitations of the policy. ...

Period of time after the expiration of a claims made basis liability coverage policy during which claims may be made. ...

Modest life insurance coverage to pay burial expenses upon the death of an insured. ...

Aggregate sums, in certain states, to pay claims of insolvent insurance companies. These funds are maintained by contributions of companies operating in a particular state in proportion to ...

Plan under which an employee may make a rollover contribution. If that contribution is from a qualified trust, the employee may make rollover contributions to an employer's qualified trust, ...

Life insurance policy provision stating that after the death of an insured, the proceeds from a policy are not immediately paid to the primary beneficiary; instead, they are delayed for a ...

Coverage for the inside of an insured premises of a business firm if it experiences a loss of money, securities, personal property, and damage or destruction of real or personal property ...

Popular Insurance Questions