Time to Learn About NEW 2022 Profit Sharing Plans

…and how you can make money from them.

A profit-sharing plan accepts discretionary employer contributions. There is no set amount that the law requires you to contribute. That makes them a hot commodity in 2022. If you can afford to make some amount of contributions to the plan for a particular year, you can do so. Other years, you do not need to make contributions. Also, your business does not need profits to make contributions to a profit-sharing plan. You will like this…you can potentially invest profit sharing assets in cryptocurrency (Bitcoin, Etherium, etc) in tax friendly arena.

If you do make contributions, you will need to have a set formula for determining how the contributions are divided. This money goes into a separate account for each employee.

One common method for determining each participant’s allocation in a profit-sharing plan is the “comp-to-comp” method. Under this method, the employer calculates the sum of all of its employees’ compensation (the total “comp”). To determine each employee’s allocation of the employer’s contribution, you divide the employee’s compensation (employee “comp”) by the total comp. You then multiply each employee’s fraction by the amount of the employer contribution. Using this method will get you each employee’s share of the employer contribution.

If you establish a profit-sharing plan, you:

• Can have other retirement plans
• Can be a business of any size