Any business, whether a C Corporation, S Corporation, partnership, sole proprietorship, self-employed can establish a Profit Sharing Plan.
New Profit Sharing Plans must be established by the end of the tax year.
Employer sets the eligibility requirements at the time the Profit Sharing Plan is established. If desired, the employer can restrict individuals with less than 1 year service, (2 years if 100% vested) from being eligible for the plan.
The employer only makes contributions to the Profit Sharing Plan. Employees do not make any contributions.
Employer can make deductible contributions to the Profit SharingPlan up to 25% of eligible compensation.
Annual contributions to the plan are discretionary.
Annual contributions to the Profit Sharing Plan must be made by the tax filing date, including extensions.
Contributions to each participant cannot exceed 100% of compensation up to $42,000.
Loans are permitted if allowed by the terms of the Profit Sharing Plan.
IRS approved prototype plans are available.
Vesting Schedule is allowed.
Profit Sharing Plans have full ERISA requirements and an annual IRS 5500 filing is required.
Numerous investment choices available for funding Profit Sharing Plans.
As of January 1, 2000, Profit Sharing Plans can be coupled with Defined Benefit Plans.
All Mutual Funds, Variable Annuities and Variable Life Insurance policies are offered by prospectus ONLY. For complete information including charges and expenses obtain a prospectus, and read it carefully before you invest.
Mutual Fund, Variable Annuity and Variable Life prospectuses are available directly from the issuing companies when product information is requested, and in some cases, they can be downloaded directly on the issuing company's internet website.
The tax deferral characteristic associated with variable annuities is not needed when used in an account that is by definition tax deferred (retirement accounts) and according to some sources variable annuities generally have higher fees and internal expenses than mutual funds.
Systematic and dollar cost averaging within Mutual Funds, Variable Annuities and Variable Life insurance policies does not assure a profit and does not protect against loss in declining markets. It involves continuous investment in securities regardless of fluctuating prices and the investor should consider his or her financial ability to continue purchases through periods of low price levels.
Investing in stocks, bonds, mutual funds and variable annuities does not guarantee a profit.
All of these investments can lose money. Stocks, bonds, mutual funds and variable annuities are not FDIC insured.