profit sharing

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Related to Profit sharing plan: Deferred Profit Sharing Plan

profit sharing,

arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of equipment, and the like. Profit sharing does not imply participation by the workers in management. The employer determines the rate at which profits are shared; since the rate is fixed beforehand, profit sharing differs from the bonusbonus,
extra amount in money, bonds, or goods over what is normally due. The term is applied especially to payments to employees either for production in excess of the normal (wage incentive) or as a share of surplus profits.
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 system. Profit sharing plans have been in operation in France since 1842 but have not been widely adopted in the United States. The plan has been most successful in businesses where employees work without direct supervision or where it is limited to supervisory employees or lesser executives, e.g., branch managers and department managers in department stores.

profit sharing

[′präf·ət ‚sher·iŋ]
(industrial engineering)
Sharing of company profits with the employees.
References in periodicals archive ?
The 412(e)(3) defined benefit plan receives $80,000, and the 401(k) profit sharing plan receives $20,000.
When a profit sharing plan is adopted, an account is established for each participant to record the amounts held in the plan for his benefit.
Contributions can be made even if there are no current or accumulated profits.1 Even a nonprofit organization can have a qualified profit sharing plan.
Types of profit sharing plans include "age-weighted" and "new comparability" plans.
If the age-weighted plan is a profit sharing plan, the ultimate benefits to participants are particularly uncertain since the employer is not necessarily committed to any specific funding level and may even omit funding in some years.
Using a Profit Sharing Plan as An Estate-Planning Tool
Once the plan design is agreed to, it is relatively easy for companies that already have an existing profit sharing plan to convert it to an age-weighted plan, a service-weighted plan, an owner-weighted plan or other alternative.
These employer contributions to a profit sharing plan can be entirely discretionary, made according to a formula provision, or a combination of both.
401K Profit Sharing Plan & Trust, led by Mark Bentley and Thomas Rystrom.
Supreme Court are binding throughout the country, it is now absolutely certain that benefits held in a qualified pension or profit sharing plan are not subject to creditors.
A qualified stock bonus plan is similar to a profit sharing plan (see page 501).
The business does have a benefits package that pays 75 percent of employee health insurance and provides employees with a profit sharing plan, but Jones said that is not really the important part of what makes the business family friendly.