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Profit Sharing Plans
Employers contribute on behalf of eligible employees. The amount is discretionary from year to year, and can be as high as 25% of total 'eligible' payroll for eligible
employees.
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Many different allocation techniques are available, allowing plan design to favor certain groups of employees.
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Contributions are not included in employees' income for income tax or Social Security tax purposes.
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Earnings in the plan grow on a tax-deferred basis.
The plan enhances the company's ability to attract and retain 'top-notch' employees.
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A good choice for young companies with erratic or unpredictable cash flow.
Filing Requirements: Annual filing
of Form 5500 may or may not be required.
Who May
Not Have To File
You do not have to file Form 5500-EZ (or Form 5500) for a plan year
(other than the final plan year) that begins on or after January 1,
2007, if you meet the five conditions above and you have one or more
one-participant plans that separately or together had total assets of
$250,000 or less at the end of that plan year.
Example for plan years beginning on or after January 1, 2007.
If total assets in a plan (or in two or date more plans, separately or
together), that otherwise
satisfies the requirements for filing the Form 5500-EZ, exceeded
$250,000 at the end of the 2007 plan year, a Form 5500-EZ must be filed
for the 2007 plan year.
Final plan year. All one-participant plans should file the Form
5500-EZ for their final plan year indicating that all assets have been
distributed. The final plan year is the year in which distribution of
all plan assets is completed. Check the “final return” box at the top of
Form 5500-EZ if all assets under the plan(s) (including
insurance/annuity contracts) have been distributed to the participants
and beneficiaries or distributed to another plan.
Source:
www.IRS.gov
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Information is
provided for review and consideration only. Please consult legal and tax
advisors for
practical advice pertaining to your business and personal situations.
This page was last updated
on
Wednesday, January 02, 2008 11:23 AM
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