Your CEO is concerned that employees are not saving enough for their retirement. At the same, the CEO wants to have some of the company's profits shared with all employees. To address these issues, your CEO asks you, a human resource compensation specialist, to recommend the most appropriate profit-sharing plan to address this retirement issue. Which of the following profit-sharing plans would you recommend?
A) deferred profit sharing
B) combination profit sharing
C) current distribution
D) cash plan

Question

Quizplus · Accepted Answer

Deferred profit sharing plans offer a way for employees to contribute part of their income to a retirement plan. Typically, the company contributes to the plan based on a percentage of the employee's salary or the company's profits. The benefit is deferred, meaning that the employee will not receive the money until they retire or leave the company. This type of plan encourages employees to save for the future and can also help to reduce upfront costs for the company. Additionally, by tying the profit-sharing plan to retirement savings, employees are incentivized to save more, which addresses the CEO's concern.

Your CEO Is Concerned That Employees Are Not Saving Enough