Profit sharing plans allow for the sharing of employer profits with employees utilizing the discretionary option. Since neither the contribution nor the benefit is fixed, some employers find this desirable if they are not certain how much they can contribute to a plan from year to year. The maximum contribution for the firm is based upon the maximum deduction limits of 25% of eligible compensation with limits on contribution allocations per participant. This plan generally favors younger employees and is utilized by businesses requiring flexible contribution levels.

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