Many plans choose to provide a profit sharing program for the 401(k) plan (and no, you don’t have to be a profitable company in order to provide a profit sharing contribution). Unlike an employer match, profit sharing contributions go to all eligible employees, not just those contributing 401(k) deferrals. A common practice with profit sharing contributions is to link the amount of the contribution to an employee’s compensation (i.e. 10% of salary). Profit sharing is generally calculated and funded once a year.
Articles in this section
- What is an effective date?
- I keep hearing the terms eligibility, matching and vesting. What do they mean?
- What happens to our 401(k) plan if my company merges with or acquires another company?
- I’m new to the 401(k) space - can you help me understand what it takes to implement a 401(k) plan?
- I know that 401(k)s are highly regulated. What do I need to be thinking about before getting started with a plan?
- I am offering a 401(k) plan for the first time. Are there any benefits for me as the sponsor?
- How does employer profit sharing work?
- Who is eligible to join my 401(k) plan?
- Do I need to have my plan audited by an independent accounting firm?
- I’ve heard something about a “fidelity bond” - what is it and what do I need it for?