Contributions are completely flexible and determined by the employer each year.
This type of plan is generally used by new businesses or those with fluctuating profits. The typical profit sharing plan allocates contributions evenly among all participants, based on a percentage of wages. This plan uses an allocation skews contributions towards those participants who are earning more that the current F.I.C.A wage base. This plan is fairly new and can be used to skew contributions towards those who are more highly paid. This plan is more complicated and therefore more expensive.