Question

A company which has a profit sharing plan

a.) May contribute as much as they want to the plan without penalty as long as the contribution is distributed in a nondiscriminant manner using a predetermined formula.
b.) Must contribute to the profit sharing plan if they have had a profitable year.
c.) Can use Social Security integration to contribute more to higher income employees.
d.) Must make equal contributions to each employee based on the profitability of the company.

Answer 1

A company with a profit sharing plan can contribute as much as they want in a nondiscriminant manner using a predetermined formula. They must contribute if they have had a profitable year. Social Security integration can be used to contribute more to higher income employees. Contributions can be distributed unequally.

Step-by-step explanation:

A company with a profit sharing plan has certain rules and options when it comes to contributing to the plan. Here are the correct statements:

1. A company may contribute as much as they want to the plan without penalty, as long as the contribution is distributed in a nondiscriminant manner using a predetermined formula.
2. A company must contribute to the profit sharing plan if they have had a profitable year. This means that if the company has made a profit, it is required to contribute to the plan.
3. A company can use Social Security integration to contribute more to higher income employees. This means that the company can take into account the Social Security benefits of its employees when determining their profit sharing contributions.
4. A company is not required to make equal contributions to each employee based on the profitability of the company. The contribution can be distributed in a nondiscriminant manner using a predetermined formula, which may result in unequal contributions.