Apply for JIO IPO - India’s Mega IPO Is Here!

Apply for JIO IPO -

Angel One - Share Market Trading and Stock Broking
Skip to main content
Retirement Planning

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

Form 8606

Understand the meaning and definition of Form 8606 in the context of stock market, trading, and investments.

MORE
Rollover

Understand the meaning and definition of Rollover in the context of stock market, trading, and investments.

MORE
Dollar Cost Averaging*

Understand the meaning and definition of Dollar Cost Averaging* in the context of stock market, trading, and investments.

MORE
Earned Income Rule

Understand the meaning and definition of Earned Income Rule in the context of stock market, trading, and investments.

MORE

Open Free Demat Account!

Join our 3.8 Cr+ happy customers

+91
Explore other categories
Enjoy Zero Brokerage on Equity Delivery
10 Cr+DOWNLOADS

Enjoy Zero Brokerage On Stock Investments

Get the link to download the App

Scan this QR code to download the app
Get it on Google PlayDownload on the App Store