Definitions for "Profit-sharing plan"
A retirement plan designed to provide a fund to pay for retirement income to employees. Such plans depend on varying profits invested from year to year to fund the plans.
Any plan whereby a portion of the profits of a company is set aside for distribution to employees who qualify under the plan. The plan may provide for immediate, quarterly, or annual distribution of the profits to employees as an incentive to more efficient production. Profit-sharing distributions may also be set aside in a trust fund for eventual distribution to employees usually upon death, disability, termination, or attainment of a specified retirement age. Such plans are known as profit-sharing trusts and are subject to special tax exemptions if certain qualifications, set down in the Internal Revenue Code, are met.
Kind of retirement plan in which an employer contributes to a trust to provide benefits to employees or their beneficiaries after retirement.