profit sharing

(redirected from Profit sharing plan)
Also found in: Dictionary, Thesaurus, Financial, Acronyms, Encyclopedia.
Related to Profit sharing plan: Deferred Profit Sharing Plan

profit sharing,

n a mechanism for funding a retirement plan for employees or members of a professional association. Members are eligible for a percentage of the net income based on predetermined formulae. Such plans, properly executed, are legal and ethical and are to be differentiated from fee splitting, which is illegal and unethical, in which a referring professional shares in the fee-for-service income of another professional.

profit

the amount by which income exceeds expenditure.

profit sharing
profit sharing between a professional and a lay person is illegal in most countries because it is considered to be improper for a nonveterinarian to have any authority over the quality and style of the work of a professional person.
Mentioned in ?
References in periodicals archive ?
Employer contributions to a profit sharing plan can be based on either (a) a discretionary provision or (b) a formula provision.
A contribution can be made to a profit sharing plan even if there are no current or accumulated profits.
As mentioned earlier, even a nonprofit corporation can adopt a profit sharing plan with purely discretionary contributions or contributions based on some appropriately defined surplus account.
Since a profit sharing plan is a defined contribution plan, it is covered by the foregoing rule.
A participant's benefit under a profit sharing plan is derived from his account balance for the employer's contributions plus forfeitures and his account balance for his own contributions.
Even though qualified profit sharing plans can be a form of retirement plan, since they defer the payment of amounts contributed on behalf of the participants to a later date, a profit sharing plan may distribute amounts contributed as long as such amounts have been in the plan for two years.
In addition to the flexibility described above, the acquisition of a survivorship life insurance policy through a profit sharing plan has other benefits that are described in the August 1991 article.
By using a profit sharing plan as an estate planning tool, the grantor maintains the ability to be a Monday morning quarterback and can always look back to determine if the beneficiary designations and the dispositive provisions of the ILIT should be modified.
The money purchase plan is a defined contribution individual account plan similar to a traditional profit sharing plan, except that up to 25% of the total salary of participants may be contributed and the company's contributions are neither discretionary nor flexible.
The age-weighted profit sharing plan resembles the defined benefit plan in that the contributions are actuarilly structured.
The surviving spouse can roll the account into an IRA or draw death benefits directly from the profit sharing plan.
This income tax is the same as would be imposed on any other distribution from a profit sharing plan not rolled into an IRA.