Deferred Profit Sharing Law and Legal Definition
Deferred profit sharing is a qualified, tax-deferred retirement plan where the employer contributes a percentage of pre-tax profits to employee accounts. The allocation of funds to employee accounts can be arbitrary or follow a contribution formula, using the following factors:
1. percentage of profits,
2. fixed dollar amount per employee,
3. percentage of payroll,
4. occupational class,
5. seniority,
6. matching employee contributions to a RRSP or a pension plan.
7. Contributions and expenses are tax-deductible to the employer. Contributions are not added to employees' earnings and do not increase payroll taxes.
Legal Definition list
Related Legal Terms
- Abnormal Profits
- Accounting for Profits
- Accumulated Earnings and Profits
- Adjusted Underwriting Profit
- Assessment for Profits
- Attorney General's Equitable Sharing Program
- Central Nonprofit Agency
- Charitable or Nonprofit Activity (Gaming Law)
- Community-Based Nonprofit Housing Developer [Banks & Banking]
- Comparable Profit Method (CPM)
