Sharing wealth is a great way to motivate employees. Profit sharing is a popular addition to 401(k) plans, along with bonuses, raises, and other perks. Profit-sharing plans are employer-sponsored retirement plans that contribute pre-tax dollars to employee accounts based on the company’s profitability. Employees of the organization are eligible to participate in profit-sharing at the employer’s discretion. Profit-sharing plans combine flexibility with significant tax advantages for employers and employees and can be advantageous to both.
