Profit Sharing

A Profit Sharing Plan allows employees to share in a portion of a company’s profits. This type of plan is flexible in that it

  1. allows an employer to make discretionary or “targeted” employer contributions to any or all Non-Highly-Compensated Employees (NHCEs),
  2. allows for an employer and Highly-compensated Employees (HCEs) to receive a portion of profits, though the amounts will be contingent on Discrimination Testing and other variables
  3. enables an employer to wait until the end of a Plan year to assess profits and determine whether an employer contribution will be made.

A Profit Sharing Plan can “stand-alone” or it can be added as a “piggyback” feature to other types of 401(k) plans. Profit Sharing plans are regulated by the IRS and DOL (Department of Labor) and do require compliance testing, government filings, and a plan document. Also, there are restrictions related to when and how funds can be withdrawn without penalties.

Contact NestEggs for more information or to set up a free consultation to discuss the retirement plan option that is right for your business.

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