Profit-Sharing Plan
Employer contributions that may be discretionary; often paired with a 401(k)
A profit‑sharing plan is an employer plan feature where the employer contributes to employees’ retirement accounts based on a formula or discretion (depending on plan design). It’s commonly layered on top of a 401(k).
The core idea (in plain English)
Your employer may add extra retirement money beyond your own paycheck contributions, sometimes varying year by year.
Common pitfalls
- Assuming it’s guaranteed (some plans are discretionary).
- Not understanding vesting schedules.
Quick mental checklist
Treat profit-sharing as a valuable bonus, but confirm whether it’s guaranteed and what vesting applies.
Official resources
Educational only. Always confirm eligibility, limits, and plan rules with IRS guidance or plan documents.