Profit Sharing Plans

Employee Stock Ownership Plan (ESOP)

1.) Stock Bonus Plan- the company is giving the company "X" numbers of stock. 2.) Stock Purchase Plan- You have the right to purchase the company's stock at a discounted rate.

Individual Retirement Account

1.) Traditional- when "X" makes a contribution, it is tax deductible. (take a $5,000 annual income tax deduction). 2.) Roth- you do not receive the income tax deduction when you set it up, BUT you aren't taxed when you take the money out. The earliest you can withdraw is 59.5 years old.

Profit Sharing Plans are:

More motivational then they are a pension. They are: 1.) To induce employees, realizing they will be sharers in the profits of the enterprise, to reduce waste of both time and material; 2.) To increase productivity; and 3.) To make employees feel that they have a proprietary interest in the enterprise.

Why do companies set up retirement plans?

To attract and retain good employees