Wealth &
Protection Planning

Profit Sharing

Profit Sharing Plans, which are a type of defined contribution retirement plan, offer the flexibility for the plan sponsor to make an annual contribution of between 0% and 25% of the aggregate considered compensation of those participants who receive a share of the contribution. Contributions are not limited to profits and are not required every year but must be “ongoing” to avoid a deemed termination of the plan.  Each participant’s allocation can be “offset” by a portion of the employer’s Social Security contributions.

For allocation purposes, each participant’s annual compensation is subject to a cap.  The cap is indexed to inflation. Each participant’s contribution allocation is limited to the lesser of 100% of compensation or the “dollar limit” which is also indexed to inflation.

Profit sharing plans can be designed to offer benefit payments prior to retirement with certain restrictions.

Benefits can be subject to a vesting schedule (generally not more than six or seven years of service for full vesting). The “forfeited” benefits of partially-vested terminated participants are generally allocated to the accounts of the remaining participants or used to pay the costs of the plan.

Contact a STRIVE Wealth Advisor for more information about profit sharing plans. 

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