Fairfax, Virginia (webnewswire) December 19, 2018 – Incisive Financial Group, a Fairfax wealth management firm, released a blog discussing everything readers need to know about profit sharing plans. This type of retirement plan can be beneficial for businesses that want their employees to feel more connected to their companies.
Profit sharing plans are considered defined contribution plans. This means that employers are able to determine how much will be contributed to employees’ retirement plans and when those contributions will be made throughout the year. Most employers choose to fund each account according to the employees’ salary level. Each employee enrolled in a profit sharing plan receives a portion of the company’s profits that year, so more senior employees generally receive a larger share. Employees are taxed only when they receive a distribution from the plan, either when they retire or when they move to a new company, and plans vest over the course of the employee’s tenure. Employees who leave before their shares fully vest may receive less than the full amount.
Profit sharing plans create a unique working environment that brings several benefits. First, they encourage employees to be more actively interested in whether the company makes a profit and how it goes about conducting business. This can increase employee happiness, as they will feel more invested in the company’s success. It can also increase productivity. The contributions they receive to their retirement plans will be based on the company’s success, and their work, collaboration, and commitment to producing quality work may grow as a result. In addition, most profit sharing plans have the same tax advantages as traditional retirement accounts, which many employees may value.
Speak to a wealth management consultant for more information about profit sharing plans. Incisive Financial Group has years of experience in helping employers and employees make sense of various savings plans, including 401(k)s, college savings plans, deferred compensation, tax deferred annuity, and profit sharing plans. Working with a benefits consultant can help you ensure that you establish the most effective profit sharing plan possible for your employees. The firm can be contacted at 703-260-9652 or online at https://www.incisivefinancialgroup.com. Incisive Financial Group is headquartered at 4032 Chain Bridge Road, Fairfax, VA 22030.
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