A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a?

A profit-sharing plan is designed to allocate a portion of a company's profits for distribution to its employees, typically as a bonus or additional retirement benefit. This type of retirement plan allows employers to contribute to employees' retirement savings based on the company's financial performance, providing employees with a direct benefit linked to profit margins.

Eligible employees receive contributions based on a predetermined formula, which may consider factors like salary levels or years of service, allowing them to accumulate retirement funds over time. This plan not only incentivizes employees but also aligns their interests with the company's financial success, fostering a cooperative work environment.

In contrast, a 401(k) Plan is primarily employee-driven, allowing workers to defer a portion of their earnings into a retirement account, often with employer matching up to a certain percentage. A pension plan, particularly a defined benefit plan, guarantees a specific payout at retirement based on salary and years of service, and is funded primarily by employer contributions rather than tying benefits directly to company profits. Therefore, the most accurate identification of a plan that sets aside a part of net income for employee distribution is the profit-sharing plan.