Any eligible employee can participate in a profit sharing plan. Employers can choose to exclude certain types of employees, such as part-time or seasonal workers, from the plan.

The amount that an employer can contribute to a profit sharing plan varies depending on the plan’s design and the company’s profitability. The maximum amount that can be contributed in a given year is typically 25% of eligible employee compensation, up to a certain dollar limit.

Contributions can be allocated based on a variety of factors, including each employee’s salary or hours worked. Employers can also choose to allocate contributions based on a formula that takes into account each employee’s tenure or performance.

Employers can choose to vest employees’ accounts immediately, or they can require a certain period of service before an employee’s account is fully vested. The maximum vesting period allowed by law is six years.

Employees can generally withdraw funds from a profit sharing plan when they reach age 59 1/2 or when they retire. Employers can also choose to allow hardship withdrawals in certain circumstances, such as a medical emergency or a natural disaster.

Contributions to a profit sharing plan are tax-deductible for the employer, and employees do not pay taxes on the funds contributed to their retirement accounts until they withdraw them in retirement. However, there are penalties for early withdrawals and required minimum distributions after age 72.