Profit Sharing Plans
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If your business has variable profits and you are seeking a flexible and cost-effective qualified retirement plan, consider a profit sharing plan. When you establish a profit sharing plan with Merrill Lynch, you and your employees can benefit from our broad range of investment choices, as well as the advice and guidance of our Financial Advisors. You also will have access to many other business services Merrill Lynch provides.

  • Employer contributions are generally tax-deductible, and contributions and investment earnings grow tax-deferred until withdrawal
  • Choose from a broad array of investment choices
  • Stay flexible – contributions are not mandatory, and you can change the amount of your contributions each year

Profit Sharing Plan Features

Plan description

Profit sharing plans allow employers to make tax-deductible contributions for each plan participant. Profit sharing plans also feature additional services, such as loans, that SEP or SIMPLE plans do not.

Plan type

In addition to traditional profit sharing plans, age-weighted plans, structured to benefit older, highly compensated employees, are available.

Plan eligibility

Generally, you can establish a profit sharing plan as long as you do not maintain any other defined benefit or defined contribution plan.

Participant eligibility

Any employee age 21 and older who has completed two years of service must be included in the plan. (You can establish less restrictive eligibility requirements.)

Employer contribution

For 2007, you can make a tax deductible contribution up to the lesser of 25% of compensation (up to $225,000) or $45,000 for yourself and each eligible employee.

Employee contribution

Employee contributions are not permitted in profit sharing plans.

Employee loans

Employee loans are permitted.

Frequently Asked Questions About Profit Sharing Plans

What tax advantages will my business receive with a profit sharing plan?

Employer contributions are generally tax-deductible as a business expense. Additionally, if eligible, you may take a nonrefundable income tax credit for 50% of the first $1,000 of administrative and retirement education expenses you may incur in each of the program’s first three years.

What are my responsibilities with a profit sharing plan?

You will need to file IRS Form 5500 if there is more than one participant in the plan, or once plan assets exceed $200,000 for a plan with one participant.

Is there a vesting schedule for contributions?

Depending on the type of plan you select, you will have either 100% immediate vesting or a vesting schedule.

What is the deadline for establishing a profit sharing plan?

The plan must be adopted by your business’s fiscal year-end.

Related Products & Services

For your business financial needs:

For your personal financial needs:

 

 

For more information call 1.866.4ML-BUSINESS (465-2874) or e-mail us at AskMLBiz@ml.com.

Merrill Lynch, Pierce, Fenner & Smith Incorporated is a registered broker-dealer, not a bank and the WCMA account is not a bank account. Banking services are provided by licensed banks or by third parties through arrangements with licensed banks. Unless otherwise indicated, investment products are not FDIC-insured, not guaranteed by a bank and may lose value.

Working Capital Management Account and WCMA are registered service marks of Merrill Lynch & Co., Inc.

Basic and Retirement Cash Management Account are service marks of Merrill Lynch & Co., Inc.

Neither Merrill Lynch nor its representatives provide legal or tax advice. You should consult with your own legal/tax advisor regarding your particular situation.

* Additional fees for these services may apply.

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