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Note: this page is about the Missouri Profit Sharing Plan (Business)
For federal Profit Sharing Plan (Business), or the Profit Sharing Plan (Business) in another state, click here.
2021
Missouri
Profit Sharing Plan (Business)
Choose an applicable year
2022
|
2021
Overview
A Profit Sharing plan is a type of defined contribution plan that allows employers to make discretionary retirement contributions for employees. A contribution can be made in any year, even if the business doesn’t earn a profit.
Conformity Type:Rolling Conformity - Automatically update when federal IRC codes change
Commonly referred to as defined contribution plan
Strategy Details
Related Resources
Overview
A Profit Sharing plan is a type of defined contribution plan that allows employers to make discretionary retirement contributions for employees. A contribution can be made in any year, even if the business doesn’t earn a profit.
Conformity Type:Rolling Conformity - Automatically update when federal IRC codes change
Commonly referred to as defined contribution plan
Do I Qualify for the Profit Sharing Plan (Business)?
A profit-sharing plan is a type of defined contribution plan that allows employers to make retirement contributions for their employees. Contributions are discretionary and can be made in any year, even if the business doesn’t earn a profit.
2021
Missouri Profit Sharing Plan (Business) Details
Profit Sharing plans are a popular retirement savings vehicle for businesses. This type of retirement plan allows for discretionary contributions to be made by the business on behalf of owners and employees and does not require the business to show a profit for contributions to be made. Contribution limits are the same as 401(k) plans, but there are several key differences.
1. Only businesses can contribute to the plan
2. Contributions are not required on any set schedule
The plan must define the contribution rules and meet non-discrimination requirements for highly compensated employees when profits are distributed. One common method for distributing Profit Sharing plans is the comp-to-comp method, which allocates contributions based on an employees percentage of overall wages.
Contributions limits do apply, but with the Corvee tax planning software, you can see what tax savings you can accomplish based on your specific contribution goals.
There Are Thousands of Other Tax Planning Strategies Your Clients Are Missing Out On
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Benefits
Can have other retirement plans
Available to any size business
Flexible annual contributions (contributions are strictly discretionary)
Good plan if cash flow is an issue
Considerations
Must file a Form 5500 Annual Return/Report of Employee Benefit Plan with the IRS
Administrative costs may be higher than under more basic arrangements (e.g., SEP IRA or SIMPLE IRA plans)
Must show that benefits do not discriminate in favor of highly compensated employees
Employer contributions only (If a salary deferral feature is added to a profit-sharing plan, it becomes a 401(k) plan.)
Assumptions When Taking the Profit Sharing Plan (Business)
The employer wishes to make the maximum allowable contribution for employees.
Individual employees are capped at the lesser of 25% of compensation or the current annual limit.
Requirements to Claim the Profit Sharing Plan (Business)
Employees cannot make voluntary contributions to the profit-sharing plan.
The plan must file a Form 5500 annually with the IRS.
Business Entities That Can Claim the Profit Sharing Plan (Business)
Schedule C
Schedule F
S Corporation
C Corporation
Partnership
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All State-Level 2021 Profit Sharing Plan (Business) Details
See the federal level strategy here.
To learn more about how the Profit Sharing Plan (Business) is calculated in each state, click on your state below.
States with Profit Sharing Plan (Business)
Arizona
Alabama
Alaska
Arkansas
California
Colorado
Connecticut
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
Tennessee
Utah
Vermont
Virginia
West Virginia
Wisconsin
Stay tuned for more information on these states in the future.
District of Columbia
Nevada
Ohio
South Dakota
Texas
Washington
Wyoming
Additional Tax Strategies You May Qualify For
Those who typically qualify for the Profit Sharing Plan (Business) could also save money in taxes by using the following additional tax planning strategies:
Simplified Employee Pension (SEP)
Make contributions of up to 25% of wages to your employees' retirement
SIMPLE IRA (Business)
A salary-reduction retirement plan with few administrative requirements
Defined Benefit Plan
A qualified plan that provides fixed payment to employees at retirement
See All Strategies
The material discussed on this page is meant for general illustration and/or informational purposes only and is not to be construed as investment, tax, or legal advice. You must exercise your own independent professional judgment, recognizing that advice should not be based on unreasonable factual or legal assumptions or unreasonably rely upon representations of the client or others. Further, any advice you provide in connection with tax return preparation must comply in full with the requirements of IRS Circular 230.
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