This is an agreement between a company and its employee outlining an employee
retirement or disability plan. The agreement outlines the contribution made by the
company, employee voluntary contributions, retirement benefits, death benefits,
disability, distribution notices, methods of payment, and withdrawal and termination.
Additionally, it can be customized to provide for any additional industry-specific
language that may be necessary. This document should be used by small businesses
or other entities that want to provide a retirement or disability plan for their employees.
PROFIT SHARING PLAN
This Profit Sharing Plan (this “Plan”) is hereby made and entered into this ____
day of ____, 20__ (the “Effective Date”) by and between ______________________
(“Company”) and _______________ (“Employee”) who is an employee of Company.
WHEREAS, the purpose of this Plan is to encourage employees to systematically
save and invest part of their compensation such that they may have a source of additional
income upon their Retirement, Disability, or for their family in the event of death;
WHEREAS, Company shall make contributions to a Trust Fund (the “Fund”),
from which benefits shall be paid pursuant to the terms and conditions of this Agreement;
WHEREAS, this Plan is conditioned upon its continued qualification under
Section __ of the ________ Code, as amended from time to time, with Employer
contributions being deductible under Section __ of the ______ Code, or any other
applicable sections thereof, as amended from time to time [Comment: it is best to
determine the relevant code sections in your state related to profit sharing and
insert them here]; and
WHEREAS, it is intended by Company that this Plan qualify as a profit sharing
NOW, THEREFORE, Company and Employee hereby agree to the following
terms and conditions.
The defined terms relative to this Agreement are set forth in Exhibit “A” attached
hereto and incorporated herein by reference.
2. SERVICE CREDIT AND PARTICIPATION
A. Hour of Service
An Hour of Service is any hour for which Employee is directly or
indirectly paid or entitled to payment for the performance of his or her
Service is the period of Employment used in determining eligibility for
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participation in this Plan, as well as for determining eligibility for benefits.
Subject to the loss of Service rules set forth below in this Section, a year
of Service is the twelve month period beginning with the date of
Employee’s first Hour of Service.
C. Participation Originating Under this Plan
Each employee shall become a member in this Plan on the first day of the
month on which it: (i) is in Covered Employment; (ii) has attained its
___th birthday; and (iii) has completed a year of Service.
A. Contributions by Employer
i. Employer shall, during a Plan Year, contribute to the Trust an
amount determined at Employer’s discretion.
ii. Notwithstanding the above, such contributions shall be made only
from Employer’s current or retained earnings or profits and shall
be limited to the amount deductible by Employer.
B. Member Voluntary Contributions
i. When Employee becomes a Plan Member (“Member”) hereunder
and as of the beginning of each Plan Year thereafter, it may,
through payroll deduction, elect to make voluntary contributions.
ii. A Member may withdraw all or any part of its Employee
Contribution Account by filing a written application on a form to
be prescribed by the Committee, with at least ________ (__) days
advance notice, no more than once in any Plan Year.
iii. Members are not required or permitted to make any contributions
under this Plan.
On its Normal Retirement Date, a Member shall have a fully vested and non-
forfeitable interest in its Individual Employee Contribution Accounts hereunder.
Distribution shall be made upon Retirement. The amount of a Member’s Individual
Accounts shall be the balance as of the valuation date concurrent with or next preceding
the Date of its Retirement, plus any contributions allocated to its Individual Employee
Contribution Accounts since such Valuation Date, except that, if a retired Member who
retired other than on a Valuation Date so elects, its balance shall be determined as of the
Valuation Date next following the date of Retirement, including allocation of any
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contribution then being allocated hereunder, as if it had met any applicable Employment
and Service requirements for such contribution.
A. Designation of Beneficiary
Each Member may designate _______ (__) or more Beneficiaries and
contingent beneficiaries to receive the benefits payable hereunder in the event of the
death of such Member.
Upon the death of an Employee who is a Member, its designated
beneficiary or beneficiaries become fully vested with respect to the balance of its
Individual Employee Contribution Accounts as of the Valuation Date concurrent with or
next preceding the date of its death, plus any contributions allocated to that Member’s
Individual Employee Contribution Accounts since such Valuation Date, except that, if the
beneficiary of a Member who died other than on a Valuation Date so elects, such balance
shall be determined as of the Valuation Date next following the date of death, including
allocation of any contribution then being allocated hereunder as if the Member had met
any applicable Employment and Service requirements for such contribution. Payment
shall be made at the time and in the manner provided in Section 9 herein and below.
In the event of the disability of a Member, such Member shall be fully vested in
the balance of its Individual Employee Contribution Accounts as of the Valuation Date,
plus any contributions allocated to such accounts since such Valuation Date.
7. FORFEITURES FOR TERMINATION OF EMPLOYMENT,
If a Member’s Employment with all affiliated employers shall terminate
for any reason other than its Retirement, death, or Disability, such Member shall be
entitled to such benefits as are hereinafter provided.
A Member to whom the provisions of Section 7.A are applicable shall be
i. The balance in that Member’s Employee Contribution Account, as
of the Valuation Date concurrent with or next preceding the date of
termination, plus any contributions allocated to any such accounts
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since such Valuation Date.
ii. The “vested percentage” of its Employer Contribution Account.
Such amount shall be equal to a percentage of the balance in such
account as of the Valuation Date concurrent with or next preceding
the date of such termination. The percentage to which said
Member shall be so vested and entitled shall be determined in
accordance with the following schedule:
Completed Years of Service Vested Percentage
Less than 3 years . . . . . . . . . . . . . . . . . . . . . . _______%
3 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _______%
4 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _______%
5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _______%
6 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _______%
7 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . _______%
A Member to whom this Section applies shall forfeit that portion of the
amount in its Employer Contribution Account to which it is not entitled and the amount
thus forfeited shall remain in the Trust Fund and shall, as of the allocation date following
that Member’s termination of Employment, be released for reallocation hereunder. If
such former Member resumes covered employment before having a _______ (__)-year
break in service and makes the repayment described in the following paragraph, a special
contribution, equal to the forfeited amount, will be made to restore such forfeited amount
to its Employer Contribution Account. Such special contribution shall, to the extent
possible, be made from any other Members’ forfeitures then available for allocation
hereunder and, to the extent such other forfeitures are not sufficient, such special
contribution shall be made by Employer.
In order to receive the restoration described in the above paragraph, the
Member must, within _______ (__) years of its reentry into covered employment, repay
to this Plan the amount of any distribution it received herefrom on account of such break
in service, except for the amount of such distribution attributable to voluntary Employee
D. Early Retirement
A Member may commence “Early Retirement” on or after age ____
provided it has completed _________________ (__) years of Service with Employer.
8. DISTRIBUTION NOTICES AND METHODS OF PAYMENT
E. Notice to Trustee
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As soon as practicable after a Member becomes entitled to a distribution
hereunder, the Committee shall give written notice to the Trustee, which notice shall
include the following information:
i. Name and address of the Member;
ii. Reason for the distribution;
iii. Name and address of the beneficiary or beneficiaries in case of a
Member’s death; and
iv. Time, manner, and amount of payments to be made.
F. Time and Methods of Payment
Payments of a benefit shall commence as soon as practicable after such
benefit becomes distributable hereunder, subject to the following:
i. In no event (unless requested by the payee) shall payments
commence later than as of a date _________ (__) days after the
close of the Plan Year in which a Member’s Employment with all
affiliated employers terminates (for whatever reason) or, if later, in
which the Member attains its Normal Retirement Date.
ii. A former Employee may elect to delay its distribution; however, in
no event shall its distribution be delayed beyond ___________
[Comment: insert date] of the calendar year following the
calendar year in which such former Employee attains age _____
iii. When benefits become payable, the Member shall direct that such
benefits shall be paid in one (1) of the following ways, or a
(a) Lump sum, payable in cash, or in kind.
(b) Substantially level periodic installments, with any balance,
upon the Member’s death, payable to its beneficiary.
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G. Appointment of Committee
Responsibility for administration of this Plan shall be with Employer,
which shall be the Plan Administrator hereunder. Employer, as Plan Administrator, shall
appoint a Committee consisting of at least ______ (__) persons who shall assist the Plan
Administrator in the administration of this Plan. All action taken by the Committee shall
be deemed actions taken by the Plan Administrator and the Plan Administrator shall,
alone, have fiduciary responsibility in connection with such actions, except with respect
to willful misconduct or gross negligence.
H. Committee Powers and Duties
The Committee shall have such powers as may be necessary to discharge
its duties hereunder, including, but not by way of limitation, the following powers and
i. To construe and interpret the Plan, decide all questions of
eligibility, and determine the amount, manner, and time of
payment of any benefits hereunder;
ii. To prescribe rules for the operation of the Plan;
iii. To receive from Employer and from employees such information
as shall be necessary for the proper administration of the Plan;
iv. To Employ an independent qualified public accountant to examine
the books, records, and any financial statements and schedules
required to be included in any reports;
v. To file with the appropriate government agency (or agencies) the
annual report, plan description, summary plan description, and
other pertinent documents that may be duly requested;
vi. To furnish each Employee and each Beneficiary receiving benefits
hereunder a summary plan description explaining the Plan;
vii. To furnish any Employee or Beneficiary, who requests in writing,
statements indicating such Employee’s or Beneficiary’s total
account balances and non-forfeitable benefits, if any;
viii. To maintain all records necessary for verification of information
required to be filed with the appropriate government agency (or
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ix. To report to the Trustee all available information regarding the
amount of benefits payable to each Employee, the computations
with respect to the allocation of assets, and any other information
the Trustee may require in order to terminate the Plan;
x. To delegate to one or more of the members of the Committee the
right to act in its behalf in all matters connected with the
administration of the Plan and Trust;
xi. To delegate to any individual(s) such of the above powers and
duties as the Committee deems appropriate; and
xii. To appoint or Employ for the Plan any agents it deems advisable,
including, but not limited to, legal counsel.
A majority of the members of the Committee shall constitute a quorum for
the transaction of business. No action shall be taken except upon a majority vote of the
Committee members. An individual shall not vote or decide upon any matter relating
solely to itself or vote in any case in which its individual right or claim to any benefit
under the Plan is particularly involved. If, in any case in that a Committee member is so
disqualified to act, and the remaining members cannot agree, Employer will appoint a
temporary substitute member to exercise all the powers of the disqualified member
concerning the matter in which it is disqualified.
J. Committee Procedures
The Committee shall adopt such bylaws as it deems desirable. The
Committee shall elect one of its members as chairman and shall elect a secretary who
may, but need not, be a member of the Committee.
K. Authorization of Benefit Payments
The Committee shall issue directions to the Trustee concerning all benefits
that are to be paid from the Trust Fund pursuant to the provisions of the Plan. The
Committee shall keep on file, in such manner, as it may deem convenient or proper, all
reports from the Trustee.
L. Payment of Expenses
All expenses incident to the administration, termination, or protection of
the Plan and Trust, including but not limited to, actuarial, legal, accounting, and Trustee’s
fees, shall be paid by Employer, or if not paid by Employer, shall be paid by Trustee from
the Trust Fund and, until paid, shall constitute a first and prior claim and lien against the
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10. TRUST FUND
M. Establishment of Trust Fund
A Trust Fund shall be established for the purpose of receiving
contributions and paying benefits under this Plan. A Trustee (or Trustees) shall be
appointed under the terms of a Trust Agreement to administer the Trust Fund in
accordance with the terms of such Trust Agreement.
N. Payment of Contributions to Trust Fund
All contributions under this Plan shall be paid to Trustee and shall be held,
invested and reinvested by Trustee in accordance with the terms of the Trust Agreement.
All property and funds of the Trust Fund, including income from investments and from
all other sources, shall be retained for the exclusive benefit of Employees, as provided in
the Plan, and shall be used to pay benefits to Employees or their Beneficiaries, or to pay
expenses of administration of the Plan and Trust Fund.
Employer reserves the right to make, from time to time, any amendment or
amendments to this Plan that do not permit reversion of any part of the Trust Fund to
Employer and do not cause any part of the Trust Fund to be used for, or diverted to, any
purpose other than the exclusive benefit of Employees included in this Plan.
12. WITHDRAWAL AND TERMINATION
O. Transfers Assets and Mergers
The Plan and Trust Fund shall not be merged or consolidated with, nor
shall any Plan assets or liabilities be transferred to, any other plan, unless each participant
in the Plan receives a benefit immediately after such merger, consolidation, or transfer,
that is equal to or greater than the benefit it would have been entitled to receive
immediately before such merger, consolidation, or transfer.
P. Plan Termination
Employer may at any time, by adoption of a resolution, terminate this
Plan. This Plan shall automatically terminate if Employer ceases to exist and no
successor continues the Plan.
Q. Suspension and Discontinuance of Contributions and Plan
i. If the Employer decides it is impossible or inadvisable to continue
to make its contributions hereunder, it shall have the power to:
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(a) Suspend contributions to the Plan;
(b) Discontinue contributions to the Plan; or
(c) Terminate the Plan as to its Employees.
ii. Suspension shall be temporary cessation of contributions and such
suspension that has not ripened into a complete and permanent
discontinuance shall not require any vesting of Individual
iii. A discontinuance of contributions, unless considered complete and
permanent, shall not require any vesting of Individual Accounts.
In such event, Employees who become eligible to enter the Plan
subsequent to the discontinuance shall receive no benefit, and no
additional benefits attributable to Employer contributions shall
accrue to any of the Members unless contributions are resumed.
After the date of discontinuance of contributions, the Trust Fund
shall remain in existence as provided in this Section, and the
provisions of the Plan and Trust Fund shall remain in force as may
be necessary in the sole opinion of the Committee.
iv. Upon termination, partial termination, or complete discontinuance
of contributions to the Plan, the Individual Accounts of each
affected Member not theretofore fully vested shall be and become
fully vested and non-forfeitable in each such Member.
R. Liquidation of Trust Fund
Upon termination, or partial termination, of the Plan, the proportionate
interests of the affected Members and their beneficiaries shall be liquidated after
provision is made for the expenses of administration, termination, and liquidation.
Thereafter, the Trustee shall distribute as soon as administratively feasible the amount to
the credit of each such Member and beneficiary as the Committee shall direct.
13. EMPLOYMENT NOT GUARANTEED
Nothing contained in this Plan shall be construed as a contract of Employment
between Employer and Employee, or as a right of any Employee to be continued in the
Employment of Employer, or as a limitation of the right of Employer to discharge any of
its Employees, with or without cause.
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14. WAIVER; AMENDMENTS
The failure of a party to insist upon strict adherence to any term of this
Agreement, on any occasion, shall not be considered a waiver or deprive that party of the
right thereafter to insist upon strict adherence to that term, or any other term, of this
Agreement. No modification, variation, amendment, or waiver of this Agreement shall
be effective without the written consent of both parties hereto at the time of such
modification, variation, amendment, or waiver.
In the event a claim or dispute shall arise between the parties to this Agreement,
arising out of or relating to this Agreement, or the breach thereof, the parties agree to
participate in at least _________ (__) hours of mediation prior to filing a formal
complaint in a court of law. The parties agree to share equally in the costs of mediation.
16. GOVERNING LAW; VENUE
The validity, performance, and interpretation of this Agreement shall be governed
and construed in accordance with the laws of the State of _________, without regard to
its conflicts of law provisions. Each of the parties irrevocably submits for all purposes in
connection with this Agreement to the exclusive jurisdiction of the state and federal
courts located in the County of ___________, State of __________. In addition, each
party consents to venue and hereby waives objections to venue for any action
commenced in such courts.
17. ENTIRE AGREEMENT
This Agreement, including all exhibits incorporated herein by reference,
constitutes the entire agreement between the parties with respect to the subject matter
hereof, and supersedes and replaces all prior and contemporaneous understandings or
agreements, written or oral, regarding such subject matter. No amendment or
modification of this Agreement shall be valid and binding on the parties unless in writing
and duly executed by an authorized representative of the parties.
The headings of the sections of this Agreement are for convenience only and shall
not affect the meaning of the provisions of this Agreement.
If any provision of this Agreement shall be unenforceable or invalid under any
applicable law or be so held by applicable court decision, such unenforceability or
invalidity shall not render this Agreement unenforceable or invalid, as a whole, and the
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unenforceable or invalid provision shall be amended to achieve as closely as possible the
economic effect of the original provision.
20. FORCE MAJEURE
Except for the payment of money, neither party shall be liable for any delay in
performing any of its obligations under this Agreement if such delay is caused by
circumstances beyond the reasonable control of the party so delayed and such party shall
be entitled (subject to giving the other party written notice of the full particulars of the
circumstances in question and using diligent efforts to resume full performance without
avoidable delay) to a reasonable extension of time for the performance of such
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, Company and Employee hereby execute this
Agreement on the date first above written.
Print Name Print Name
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The date upon which contributions are allocated hereunder, which shall be the last day of
the Plan Year. The Committee may use more frequent Allocation Dates as it deems fit.
Any business entity (including an Employer hereunder) that, together with an Employer
hereunder, constitutes a controlled group of corporations, a group of trades or businesses
under common control, or an affiliated Service group.
A person designated by a Member to receive the benefits hereunder upon death of such
The Employment category for which the Plan is maintained, which includes any
Employment with Employer.
A physical or mental condition which, in the judgment of the Committee, prevents an
Employee from engaging in substantial gainful Employment with Employer.
Any person who, on or after the Effective Date, is receiving remuneration for personal
Services rendered as an Employee of the Employer or Affiliated.
Each of the accounts maintained by the Committee showing the individual interests in the
Trust Fund of each Member, former Member, and Beneficiary.
An Employee who has met the eligibility requirements for participation, or a former
Member for whom an Individual Account continues to be maintained hereunder.
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Normal Retirement Date
The __th birthday of a Member.
________________, the Plan set forth herein as amended from time to time.
The annual period beginning on _____ and ending on ________.
Termination of Employment with all Affiliated Employers after a Member has reached its
Normal Retirement Date. Retirement shall be considered as commencing on the day
immediately following a Member’s last day of Employment.
A period or periods of Employment of an Employee as described herein.
______________, as amended from time to time, which constitutes a part of this Plan.
Trust or Trust Fund
The fund maintained in accordance with the terms of the Trust Agreement.
The corporation or individuals appointed by Employer to administer the Trust in
accordance with the Trust Agreement.
The date as of which the Trust Fund is valued and gains or losses allocated, which shall
be the last day of each Plan Year. The Committee may use more frequent Valuation
Dates if it so desires.
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