Question

Ardent Industries is considering starting a retirement plan for its 850 employees. One option company managers are considering is a profit-sharing plan. All the following statements represent advantages of this type of retirement plan EXCEPT: Group of answer choices Amounts forfeited by employees who leave a company before they reach full vesting are allocated to the accounts of remaining plan participants. A profit-sharing plan is a defined-contribution plan in which contributions are based on a firm's operating profit. An employer's cost of offering a profit-sharing plan is not affected by the age or number of employees. A company that establishes a profit-sharing plan must make annual contributions to the plan, even if the company fails to earn a profit during the year.

Answer 1

Answer:

A company that establishes a profit-sharing plan must make annual contributions to the plan, even if the company fails to earn a profit during the year.

Explanation:

A profit sharing plan is defined as the type of contribution plan where the plan helps in saving for the retirement of the employees while providing them the flexibility of the plan features. It is a way for the owners of the business to share the profits with the investors and also a great way to attract investment in his business.

In a profit sharing plan, the organization does not have to make or contribute any amount to the plan annually. Such a plan is best suited for the companies which experiences a fluctuating cash flow.