Final answer:
Employer profit-sharing contributions are best referred to as plan compensation, which pertains to the money allocated in a defined contribution retirement plan like a 401(k).
Step-by-step explanation:
Employer profit-sharing contributions are a part of a defined contribution plan, such as a 401(k) or 403(b), where the employer contributes a fixed amount to the worker's retirement account on a regular basis. These contributions are tax deferred, meaning they are not included in the employee's taxable income at the time of the contribution. Therefore, they do not count as net taxable compensation or gross compensation. They are also not part of the social security system, which is comprised of different types of employer payments. Given the available options, employer profit-sharing contributions are best referred to as plan compensation, which is the money set aside in a retirement savings plan that benefits the employees.
Employer profit-sharing contributions are referred to as plan compensation. This refers to the amount of money that employers contribute to a retirement plan or profit-sharing plan on behalf of their employees. These contributions are typically based on a percentage of the employee's salary and can be a valuable additional benefit for employees.