profit sharing

(redirected from Profit Sharing Plans)
Also found in: Dictionary, Thesaurus, Financial.

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.
..... Click the link for more information.
 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 ?
To summarize, compared to defined benefit plans and other pension plans (both money purchase and target benefit), profit sharing plans offer the flexibility of not having to make annual contributions, but age-weighted profit sharing plans offer the additional advantage of providing significantly larger allocations to older employees.
All profit sharing plans, regardless of how the total amount of employer contributions is determined, must have a formula under which the employer's contribution is allocated to employee accounts.
Apart from the vesting schedule, most profit sharing plans provide that a participant's account balance will become 100% vested if he should become totally disabled or die while employed.
The statute of limitations clouds the determination of XYZ employee Ellen Smith's basis in the profit sharing plan. Should she include in basis only the employer contributions actually taxed, years four through six, or should she include all six years since they were includable in income?
Unlike profit sharing plans, gainsharing plans need not be reported to the Internal Revenue Service, so the exact number of these plans is unknown.
Are there related merit good aspects of profit sharing plans and ESOPs?
Types of profit sharing plans include "age-weighted" and "new comparability" plans.
The disadvantages of target plans are the employee communication problem described in connection with fixed-formula profit sharing plans, and the inflexibility from the employer's standpoint resulting from the requirement of fixed annual funding.
One way to get around this is to fund the trust with life insurance carried in a profit sharing plan. Such funding provides the flexibility of a revocable trust
In contrast to pension plans, certain profit sharing plans can offer participants the opportunity to take "in-service distributions" prior to retirement (subject to a 10-percent early withdrawal tax penalty prior to age 59 1/2).
Supreme Court has now resolved the conflict, and in a manner favorable to those whose benefits are held in qualified pension and profit sharing plans. In Patterson v.
Alltel and its subsidiaries support a variety of plans -- a pension plan, and several profit sharing plans. An investment committee of the Alltel board of directors is responsible for hiring and monitoring outside investment managers.