Mandatory Profit-Sharing for Tax Deduction of Executive Compensation.
This bill encourages companies to share profits with employees, including part-time staff, by linking this practice to tax deductions. Specifically, companies that do not implement a qualified profit-sharing plan will lose the ability to deduct the compensation paid to highly compensated executives. This change aims to increase cash distributions for eligible employees when their employer is profitable and seeks tax benefits.
Key points
Key Change: Companies must maintain profit-sharing distributions for employees to deduct executive compensation from their taxes.
Minimum Distribution Requirement: The total annual profit-sharing distributions must equal at least 5% of the employer's net income.
Employee Eligibility: Employees, including part-time staff, who have worked for at least one year are entitled to receive these cash distributions.
Non-Discrimination Rule: Profit-sharing plans must meet non-discrimination requirements similar to those for 401(k) plans.
Hardship Exception: An employer can be exempt from the distribution requirement if they prove that making the payments would jeopardize the business's ability to continue operating.
Introduced
Citizen Poll