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Profit Sharing Plans

Profit Sharing Plans are most suitable for:

Profit Sharing Plans are most suitable for:

  • Owners and executives looking for higher tax deductions
  • Professional practices, manufacturers, and retailers looking to reward employees with retirement plan contributions
  • Companies seeking a tax deferred vehicle

About Profit Sharing Plans

A Profit Sharing Plan is a type of defined contribution plan that lets companies help employees save for retirement.

With this type of retirement plan, contributions from the employer are discretionary. That means the company can decide from year to year how much to contribute—or whether to contribute at all—to an employee’s plan. If the company does not make a profit, it does not have to make contributions to the plan. (But a company does not need to be profitable to have a profit-sharing plan.) Profit Sharing Plans may be designed so that the employer may contribute up to 25% of eligible compensation each year up to $69,000 in 2024. There are many different employer contribution allocation methods, combined with a multitude of options, which may be utilized to increase tax-deductible contributions and match appropriate goals and objectives.


This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

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