All of the following statements regarding characteristics of profit sharing plans are TRUE, EXCEPT:

a. They must contain a specific contribution allocation formula.

b. They may be used to reward employees for their efforts.

c. The employer may exercise discretion over the amount contributed to the plan each year.

d. Contributions must be based on actual profits.

e. The maximum amount the employer may deduct on its tax return is 25% of total eligible compensation of all participants.