Profit Sharing Plans

Profit-sharing plans offer you flexibility, along with various contribution options designed to reward long-term employees with tax-deferred growth — including an optional loan provision.

It offers flexibility in determining annual contribution amounts. You decide how much you want to contribute each year. You can even skip years if you need to.

Here are some other details: 

Eligibility to Contribute 

Companies of any size and structure can offer this plan. Employee eligibility requirements are set when the plan is established. 

Maximum Annual Contribution

Employer: Up to 25% of compensation or $53,000 in 2015. Profit sharing plans allow you a great deal of flexibility to vary the contribution rate each year. 

Tax-Deductible Contributions

Employers can deduct contributions from federal taxable income. 

Taxation of Earnings and Withdrawals

Contributions and earnings are taxed as ordinary income when withdrawn.

Types of Investments

Stocks, bonds, mutual funds and Advisory Products available through a Wells Fargo Advisors brokerage account. 

Withdrawal Penalties

10% IRS early withdrawal penalty if withdrawn before age 59½ unless exception applies.

Exceptions:

  • Normal retirement age
  • Separation of service after five years and reaching age 55
  • Death
  • Disability
  • Substantial equal periodic payments over life expectancy
  • Qualified military reservist 

Required Withdrawals

Must begin at age 70½

Deadline to Set Up and Fund

  • Must be established by the last day of the business’ fiscal year
  • Contributions may be made up through the business tax filing date (plus extensions) 

Commissions and Fees

Vary by account and investments

Interested in learning more about our retirement plans for small
businesses? Call us at 1-877-493-4727

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