Retirement PlanningIRA Transfer Rollover Contingent Beneficiary Definition Money Purchase Plan Definition Target Benefit Plan Definition Required Minimum Distribution (RMD)
Profit-Sharing Plan Definition
A profit-sharing retirement plan allows employers to decide on annual contributions to their employees' tax-deferred accounts. These contributions are distributed based on a predetermined formula, often favoring those with higher pay. However, employers must be cautious as such plans are subject to top-heavy testing rules to prevent excessive participation from the highest-paid individuals. In the past, profit-sharing plans were frequently paired with money purchase plans to maximize contribution limits and flexibility. But with the rise in contribution limits for simpler plans, the appeal of this combination has diminished in recent years.
Related terms
Understand the meaning and definition of IRA Transfer in the context of stock market, trading, and investments.
MOREUnderstand the meaning and definition of Rollover in the context of stock market, trading, and investments.
MOREUnderstand the meaning and definition of Contingent Beneficiary Definition in the context of stock market, trading, and investments.
MOREUnderstand the meaning and definition of Money Purchase Plan Definition in the context of stock market, trading, and investments.
MOREUnderstand the meaning and definition of Target Benefit Plan Definition in the context of stock market, trading, and investments.
MOREUnderstand the meaning and definition of Required Minimum Distribution (RMD) in the context of stock market, trading, and investments.
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