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Businesses offer Profit sharing plans to its employees as an incentive. This plan relies on the Company’s Profitability and there are many such profit sharing plans. Employees may have several questions regarding profit sharing and how such profit sharing plans work. Employment Lawyers can answer any such questions that one may have pertaining to profit sharing plans. The following are five of the most frequently asked questions regarding profit sharing which have been answered: What is the duration an employee can keep a 401k or profit sharing plan after the employee has resigned or his employment service has been terminated?
The Employment Retirement Income Security Act (ERISA) governs all profit sharing and 401k plans. Contacting one's plan administrator helps in deciding what the open period of the plan is and when disbursements may be made. All plans have provisions for a set open period that permits disbursements to be made to the employee who is no longer working for the company. After determining about the open period, one would need to file a request for disbursement. The former employer need not necessarily be contacted for this and this can be done just by perusing one’s plan and determining who to the contact. The Plan Material which would have been provided at the time of getting into the plan, usually contains all the necessary contact information. What are the provisions for an employee who is partially vested and is later terminated? Do they receive anything from profit shares?
Normally if one is an employee who is partially vested, then he/she should receive the amount that has accrued till the time one was terminated. Ideally one should review the plan for rules regarding profit sharing and termination. Usually, the only reason that an employee is not eligible to receive a percentage of the employer’s investment in profit shares would be if the employees are not vested at all. In Indiana, would it be possible for an employer to deny an employee profit shares if the shares were a part of a compensation package?
As a rule, an employer cannot hold back any part of an employee’s compensation package. In the likely hood of this happening, one may need to file a complaint with the labor board. In case the labor board does not come to one’s aid, one may need to hire the services of an employment lawyer. The employment law attorney in turn can write a letter to the employer demanding that the employee be compensated and failure to do so may lead to legal action being taken. Generally, the labor board or a letter from an attorney is sufficient to make an employee comply and distribute the funds one is entitled to. Despite all of the above actions, if one still has issues receiving the money, the employer may be sued in the small claims court. One should also bear in mind that the money owed is worth a court hearing. If an employee is eligible for profit shares and the employer declines to pay stating that the required hours have not been worked, what actions can an employee take?
In case the employer claims that one has not put in the required hours to qualify for profit shares, it is advisable to obtain a copy of any logged hours, such as copy of the time sheet and check to see if the hours are qualified in any way. If the hours worked are in actuality qualified hours, one may demand for payment and if need be, take the employer to court and sue for the amount. It is possible that the employer terminates the employee for making a claim. One may sue the employer for wrongful termination or retaliation in the event the employee is terminated. In the State of Florida, is it mandatory for an employee to take part in a profit sharing plan or can they opt out of it?
The rules mentioned in Employment Retirement Income Security Act (ERISA) should function within a set of IRS non discrimination rules. These rules are strictly covered and are enforced to prevent discrimination within profit sharing plans. This may limit one’s right to opt out of profit sharing plans unless one falls under ‘exclusion’. With several profit sharing plans available, one would need to verify the plan to see what the exclusions are and if he/she qualifies for one. There are several legal issues that can arise when discussing 401k or profit sharing plans. Whether one is an employee trying to figure out the best way to handle an issue with a former employee who is withholding profit shares, or an employer who is trying to decide which profit sharing plan is best for the company, ask an employment lawyer to provide solutions to any questions you may have.
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