Profit Sharing Plan

A retirement plan for small businesses

  • Flexible contribution amounts that can vary from year to year
  • Deduct employer contributions as a business expense
  • Offers a full range of investment choices
  • Use the Small Business Selector to find a plan

Up to the lesser of $61,000 in 2022 (without catch-up)

and 100% of compensation, with compensation taken into account capped at $305,000 in 2022. Aggregate deductible contributions generally limited to 25% of aggregate compensation.
Business federal tax return filing deadline, plus extensions

Why a Profit Sharing Plan?


Eligibility information

Employees who are age 21 or older and have worked at the company for at least one year (two years if the plan does not have a vesting schedule)


Flexibility

Let E*TRADE Capital Management manage your account, or diversify with a choice of mutual funds, ETFs, stocks, and more


Growth potential

All investment earnings are tax-deferred; participants pay taxes only upon distribution


Additional features

You can create a vesting schedule for the plan, and your employees can borrow money against their accounts

Trade more, pay less

With E*TRADE, you pay $0 commission for online stock, ETF, and options trades. Here’s a quick overview of our clear, competitive per-trade pricing.

Stocks

$0

ETFs

$0

Mutual Funds

Prices vary

no load, no-transaction-fee for more than 4,500 funds1

Bonds

$1.00

per bond for online secondary market trades ($10 minimum, $250 maximum)2

Options

50¢ - 65¢

per contract3

Profit-Sharing Plan FAQs

See all FAQs

Already have a Profit-Sharing Plan? Contribute now.

What are the eligibility requirements for Profit-Sharing Plan?

  • A Profit-Sharing Plan is a retirement account for self-employed individuals and owners of small businesses
  • Employees are eligible based on the following criteria:
    • For plans with no vesting schedule:
      • Any employee age 21 or older and
      • Has worked for the company at least for two years
    • For plans with a vesting schedule:
      • Any employee age 21 or older and
      • Has worked for the company for at least one year

What is a vesting schedule?

A vesting schedule determines how rapidly the employer contributions in a participant's account become non-forfeitable (i.e. belong fully to an employee).

Is it possible not to include employees in a Profit-Sharing Plan?

Any employee age 21 or older working for the company at least for two years must be included in the plan if the plan does not offer a vesting schedule. For plans with a vesting schedule, any employee age 21 or older and working for the company for at least one year must be included.

Is IRS Form 5500 filing required for a Profit-Sharing Plan?

Yes, an annual IRS Form 5500 filing is required for a Profit-Sharing Plan.

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