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Profesional Services

Plan Types

Profit Sharing:

• Profit sharing plans are a form of defined contribution plan, meaning the contribution amount is defined each year, generally as a percentage of compensation.

• A profit sharing plan may be established with a discretionary contribution formula, which allows the employer to determine the amount deposited according to current business conditions.

• Allocations of the contribution amount are based on a formula using compensation as a controlling factor. Although this type of program allows complete flexibility in annual contribution amounts, the general level of contribution is lower than a money purchase plan.

• The total contribution to the plan may not exceed 15% of the annual payroll of eligible employees. (However, through certain flexibility in how contributions are allocated, it is possible for individual employees within the plan to receive more than a 15% allocation of contributions, but not to exceed 25% of compensation.)