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Employee Profit Sharing Plan Rules

Profit sharing plans are incentive programs offered by a business to employees who rely on the company’s profitability. With so many profit sharing plans available, many people may have legal questions on about profit sharing laws and how profit sharing programs work. Employment Lawyers on JustAnswer can answer any question that you may have regarding profit sharing plans. Below are five of the top profit sharing questions answered by the Experts.

How long can a employer keep a 401k or profit sharing plan after an employee has quit or been fired?

All profit sharing plans and 401K’s are governed under the Employment Retirement Income Security Act (ERISA). You will need to contact your plan’s administrator to determine what the open period is for your plan and when disbursements are made. Each plan usually has a set open period that allows disbursements to be made to employees who no longer work for the company. When you find out about the open period, you will have to file a request for disbursement. This can be done without contacting the former employer, just by looking at your plan and determining who to contact. Usually, all contact information can be found in the plan material you would have been provided at the time of getting into the plan.

If an employee is partially vested in a company and is terminated, do they receive anything from profit shares?

If you are an employee and are partially vested, then you should normally receive the amount that you have accumulated up to the time that you were terminated. You should also review your plan for rules pertaining to profit sharing and termination. Usually, the only way an employee would not receive a percentage of the employer’s investment in the profit shares would be if they are not vested at all.

In Indiana, can an employer deny an employee profit shares if the shares were part of a compensation package?

In general, an employer cannot withhold any part of an employee’s compensation package. If this happens, you need to file a complaint with the labor board. If the labor board is unable to assist you, you may want to retain an employment lawyer. An employment law attorney can write a letter to your employer demanding that you be compensated or legal action would be taken. Generally, the labor board or a letter from an attorney is enough to make an employer comply and distribute the funds that you are entitled to. If you still have issues receiving your money, you could always sue the employer in small claims court. Of course, you would want to make sure the amount of money owed to you is worth a court hearing.

If an employee is qualified for profit shares and the employer refuses to pay stating not enough hours have been worked, what can the employee do?

If your employer is saying that you have not worked enough hours to qualify for profit sharing, you need to obtain a copy of any logged hours, such as a copy of your time sheet and see if the hours are qualified in some way. If the hours you have worked are actually qualified hours, you could demand payment or if necessary, take the employer to court and sue for the amount. Your employer may decide to terminate you in response to your demands. If the employer does terminate you, you can then sue for wrongful termination and retaliation.

In the state of Florida, can an employee opt out of a profit sharing plan or are they required to take it?

The rules in the Employment Retirement Income Security Act (ERISA) must operate within a set of IRS non discrimination rules. Due to very strict coverage rules that are enforced to prevent discrimination within profit sharing plans, you may be limited in opting out unless you fall under ‘exclusion’. With so many different profit sharing plans available, you need to examine your plan to see what the exclusions are and if you would qualify for one.

There are so many legal questions that can arise when discussing 401K profit sharing or other profit sharing plans. Whether you’re an employee trying to decide the best way to handle an issue with a former employer who is withholding profit shares, or an employer trying to decide which plan would be best for your company, Employment Lawyers on JustAnswer can help you with these questions. The Experts on JustAnswer answer a wide variety questions about profit sharing and can give you answers to your questions in a fast and knowledgeable manner.

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Recent Profit Sharing Questions

  • i worked at a corporation for 27 years and i discovered the

    i worked at a corporation for 27 years and i discovered the owner was frauding the profit sharing plan, i have documented proof, so i quit the company to sue,

    how long is the statue of limitation for me to take action?
  • Hello, My employer has not given me an compensation plan.

    Hello,

    My employer has not given me an compensation plan. I have a multi-tiered payplan that includes a base salary, a bonus, and profit sharing. I have an email from my boss that tells me what I am supposed to make which was the premise of me taking the new position but after 7 months of working here I still don't have any bonus metrics and an actual written compensation plan. I have requested one numerous times but my boss won't provide one. I am in a tough spot because if I report this to HR I feel my relationship with my boss will deteriorate. Is what they are doing illegal in CA? Is it ok for a company to make up compensation models as they go? What are my rights as an employee?
  • My employer has sponsored my work visa in the US and I have

    My employer has sponsored my work visa in the US and I have been working with them for a few years now. Most of my work was 3rd party client based projects except for one project which was in-house (a new web portal or a mid-sized web site if I may call it that way).

    The duration of time when I worked for the in-house project was about 2.5 years between year 2011 to 2013. My employer did not pay me a salary on a few occasions claiming decline of revenue and non-performance of sites. Moreover, I think they have violated the law by filing numerous visas on the new division's name (showing it as an independent company) - for employees who actually don't work for that division or web portals in any way. They have not provided me any visibility into the financials and I believe they could be doing a lot of wrong things.

    I got fed up and decided to go and work on a new client project on contract basis - where my employer (sponsoring company) would still remain the same. I have been working on the new client project for almost a year now and my employer has been paying me the salary from this project so far; with some intermittent delays.

    When I started working on my employers internal project - I was provided with some shares & profit sharing (bonuses) in addition to my salary. I have sent many requests to them by email, phone calls and text messages asking about it and they have never responded back.

    This week - I received a letter from their "in-house counsel" which I think is an intern lawyer or something. The letter has content which is not true. They claim to have made numerous unsuccessful attempts to contact me to initiate an internal audit to find out the reason for revenue decline and they are asking me to participate in it.

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    2 - Can I resign from the company right away and switch to a new sponsoring employer? What are the ramifications of doing it with respect to this letter or notice that I have received?

    3 - My employer is based in a different state and I am in a different state. If I have to partner with a lawyer; would that need to be in my state or the employer's state?
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