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[Music] lets take a look at profit sharing plans with profit sharing plans employees receive a share of the firms annual profit well that sounds good in theory free riders may again be a problem some may ask if everyone gets paid at the same whether or not they work hard why bother other studies found that profit sharing plans boost productivity and morale but that their effect on profits is indocHub once you factor in the costs of payouts a more recent study found that employee earnings rose faster in firms with profit sharing plans there are several profit sharing plans with current profit sharing or cash plans employees share a portion of the employers profits quarterly or annually here the firm simply distributes a percentage of profits usually 15 to 20 percent as profit shares to employees at regular intervals with deferred profit sharing plans the employer puts cash awards into trust accounts for the employees retirement employees income taxes on the distributions are de
