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Chapter 4. No Plan Is an Island > Profit Sharing or Stock Bonus Plans

Profit Sharing or Stock Bonus Plans

Profit sharing plans, while not significant in today's retirement plan picture, have been around for well over 200 years, dating back to companies like Sears, Eastman Kodak, and Procter & Gamble. The Depression nearly wiped out these plans, which saw a resurgence in the 1950s and 1960s. Profit sharing plans have elements of defined contribution plans whereby your employer shares profits with you within the qualified plan. Those contributions are made exclusively by your employer, while you make no contribution, and the contributions are completely discretionary. They are typically coupled with a 401(k) plan so that employees can add to their retirement savings.


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