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Profit-sharing plans distribute company profits to employees, serving as a group-level incentive. These can be provided as cash or deferred into a retirement account, offering tax advantages since the income is taxed at a lower rate upon retirement. These plans encourage employees to concentrate on the company's overall performance rather than just their individual contributions, helping align their efforts with the company's success. Additionally, they can enhance employee motivation and satisfaction by allowing them to share in the profits they help generate. This makes profit-sharing an important strategy for fostering a productive workplace.