How Profit Sharing Works in a Retirement Plan

Profit Sharing

Fisher Investments® 401(k) Solutions

[Upbeat music]

A woman dressed in a navy blazer. A flyout in the lower left corner identifies her as Heather Wolfsmith Vice President of Marketing for Fisher 401(k)

[The volume of the music is reduced]

Female Voice: Profit sharing is a strategic tool that business owners can use to slash their taxes and turbo charge their savings.

The camera zooms in as the woman continues to speak.

A profit sharing plan can mean a lot of different things. The type that we are going to talk about today is related to a retirement plan.

And there are really three main types of contributions an employer can make to a retirement plan.

The first is a match contribution. The second is a safe harbor contribution. And the third is a profit sharing contribution.

Which we’re going to talk little bit more about today.

The camera zooms back out.

Profit sharing is a type of flexible contribution that allows business owners to save up to the IRS maximum of $64,500 per year. That contribution also is tax deductible and grows tax deferred.

The camera zooms back in.

Profit sharing is a strategic tool for a business owner because it is both discretionary and flexible.

A business owner can decide year-to-year whether to contribute and how much to contribute.

It also has a 6-year vesting schedule. Which means that a business owner can incentivize employee retention.

We are small business retirement specialists, which means we have the knowledge and expertise to help business owners implement these sophisticated strategies.

The camera zooms back in.

When our clients do better. We do better.

The screen dissolved to white

[Music]

Fisher Investments 401(k) Solutions. © 2021 Fisher Investments. Investing in securities involves the risk of loss. Intended for use by employers considering or sponsoring retirement.

The volume of the upbeat music increases.

Screen fades to black.

Music fades out.