Expert: Allen - 5/25/2010

Question
I have worked for a company for the last 30 years, and in the early years we had profit sharing till about mid 1980's then they changed to a 401K. At the time they put about $5,000.00-$8,000 a year for about 8 years. The balance rolled over to a 401K, and they match 100% up to 7% I think.

 My question is, can they add a profit sharing to this 401K? I have heard through the grapevine that some employee's are getting both is this true?

Answer
A profit sharing plan can have any or all of the following parts:
1. Profit sharing part where the company may make a contribution for all employees who meet the eligibility requirements. The eligibility for this portion of the plan can be limited to a group of employees.
2. 401k part where an employee can defer a portion of his/her salary.
3. Matching contribution part where the company may make a contribution for those who contribute to the 401k part.

So the answer to your question is yes the company can add a profit sharing part to the plan for some or all employees..