Which of the following statements regarding profit-sharing plans is (are) CORRECT?

1. The maximum tax-deductible employer contribution to a profit-sharing plan is 25% of total covered employee compensation.
2. Company profits are required to make contributions to a profit-sharing plan.
3. Companies adopting a profit-sharing plan are required to make annual contributions to the plan.
4. Profit-sharing plans are only suited for companies with predictable cash flows.

Question 24 ANSWERS:

A.) I, II, and III

B.) II and IV

C.) I, II, and IV

D.) I only