What Is a Profit Sharing Plan?

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A profit sharing plan gives employees a percentage of the profits the company earns each year. These funds are put into an investment account for the employees.

With the profit sharing plan, the employees gain a sense of ownership in the company. This tends to produce harder-working, more efficient employees for the company. The employees takes pride not only in their company, but also in the work they produce. Most companies do have restrictions for when the money can be withdrawn, most without penalties. These plans can be strong financial tools used for retirement monies. Most plans offer flexibility and discretion when it comes to the funds.