Stock Bonus Plan Law and Legal Definition

A stock bonus plan is a profit-sharing plan that delivers benefits to employees in the form of stock instead of cash. It is a defined contribution plan under which distributions are usually made in stock of the employer, unless the distributee elects otherwise.

A "stock bonus plan" is defined by IRS regulations as a plan established and maintained to provide benefits similar to those of a profit sharing plan, except that benefits are distributable in stock of the employer. A stock bonus plan is subject to the same general qualification requirements as a profit sharing plan and either type of plan can provide for discretionary employer contributions. There are, however, several distinctions between stock bonus plans and profit sharing plans.