Life · Chapter 11 · Defined Contribution Plans
Profit-Sharing Plan
Definition
Distributes a portion of company profits to qualifying employees. Contributions are NOT required every year — but to keep tax benefits the IRS requires them to be "recurring and substantial."
Exam tip
Bad year → the board can skip the contribution; employees keep everything already vested.
Easy to confuse with
These are what this term gets tested against — if you can't tell them apart cold, drill the contrast.
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