A firm need not contribute to its qualified profit-sharing plan only in those years it does not earn a profit.

Question

Quizplus · Accepted Answer

A firm can contribute to its qualified profit-sharing plan regardless of whether it earns a profit or not. The contributions can be based on a formula or percentage of employee compensation, and the firm has the option to reduce or suspend contributions in difficult financial times, but there is no requirement that contributions only be made in profitable years.

A Firm Need Not Contribute to Its Qualified Profit-Sharing Plan