Retirement Plans: 401(k)s, IRAs and Other Deferred Compensation Approaches 10th Edition by Allen, Joseph Melone, Jerry Rosenbloom, Dennis Mahoney

Exercise 9

Assume that a publicly held firm decides to sponsor a profit sharing plan that will incorporate a definite predetermined contribution formula. Discuss how you would establish such a formula, keeping in mind the need to be equitable to stockholders, bondholders, and employees.