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Profit-sharing plans distribute company profits among employees, serving as a group-level incentive. These plans can provide rewards either as immediate cash or through deferred profit-sharing, where funds are allocated to a retirement account. This deferral offers a tax advantage, as employees' income is taxed at lower rates upon retirement when their earnings typically decrease. Additionally, profit-sharing plans incentivize employees to concentrate on overall company performance rather than just individual achievements, aligning their efforts with the company's success. This focus can enhance productivity and morale, contributing to the organization’s growth.