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Profit Sharing Plans
A profit sharing plan is often established as a way for a business to share profits with its employees. Contributions to the plan are discretionary and not required, with no set amount. Businesses of any size can establish a profit sharing plan.
Profit sharing plan rules permit an employer to make deductible
contributions each year up to 25% of employee compensation,
or $46,000 per employee (as adjusted for inflation for 2008),
whichever is less.
Which businesses should consider a profit sharing plan?
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Businesses that want to reward long-term employees
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Businesses that require a more flexible document (employer eligibility, loans. vesting, etc.)
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Businesses that are seeking a deduction for the amount they contribute to the plan, but are not looking for a plan that allows employee contributions
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