Deferred profit sharing plans are non-contributory since the contributions are made by the employer only. Therefore, the employees do not make any contributions. True or False<\/p>\n\n\n\n
The correct answer and explanation is :<\/strong><\/mark><\/p>\n\n\n\n Correct Answer: True<\/strong><\/p>\n\n\n\n Explanation:<\/strong><\/p>\n\n\n\n Deferred Profit Sharing Plans (DPSPs) are indeed non-contributory<\/strong> retirement savings plans. This means that only the employer contributes<\/strong> to the plan; employees do not<\/strong> make contributions directly from their salaries.<\/p>\n\n\n\n In a DPSP, an employer shares a portion of the company\u2019s profits with its employees by making contributions to individual accounts set up for each eligible employee. The amount and frequency of contributions typically depend on the employer’s profitability, and the contributions are tax-deductible for the employer. However, these contributions are discretionary\u2014meaning the employer is not obligated to contribute in any given year unless otherwise agreed upon.<\/p>\n\n\n\n One of the key features of a DPSP is that it is designed to encourage employee loyalty and productivity<\/strong> by giving workers a stake in the company\u2019s success. Since employees benefit more when the company is profitable, there is a built-in incentive for them to contribute to the organization\u2019s performance.<\/p>\n\n\n\n From a tax perspective, contributions made by the employer to the plan are not immediately taxable to the employee<\/strong>. Instead, the taxes are deferred until the employee withdraws the funds, typically at retirement or upon leaving the company. This allows for potential growth of the invested funds on a tax-deferred basis.<\/p>\n\n\n\n Another important aspect of DPSPs is vesting<\/strong>. Employers may require employees to work for a certain number of years before they are entitled to the full value of the employer\u2019s contributions. If the employee leaves the company before they are fully vested, they may forfeit some or all of the employer\u2019s contributions.<\/p>\n\n\n\n To sum up, since employees do not<\/strong> contribute their own money and only the employer<\/strong> makes contributions to a DPSP, it is accurate to classify it as a non-contributory<\/strong> plan. Therefore, the statement is True<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":" Deferred profit sharing plans are non-contributory since the contributions are made by the employer only. Therefore, the employees do not make any contributions. True or False The correct answer and explanation is : Correct Answer: True Explanation: Deferred Profit Sharing Plans (DPSPs) are indeed non-contributory retirement savings plans. This means that only the employer contributes […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[25],"tags":[],"class_list":["post-207908","post","type-post","status-publish","format-standard","hentry","category-exams-certification"],"_links":{"self":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/207908","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/comments?post=207908"}],"version-history":[{"count":0,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/posts\/207908\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/media?parent=207908"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/categories?post=207908"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.learnexams.com\/blog\/wp-json\/wp\/v2\/tags?post=207908"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}