Is A Profit Sharing Plan A 401K? 
A profit sharing plan falls under IRS section 401 . Both a profit sharing plan and 401k are forms of retirement plans that allow employees to make pre-tax contributions to an account where contributions and earnings are not taxed until they are pulled out during the distribution phase . It is important to note that a profit sharing plan does not have to be part of a retirement plan . A profit sharing plan typically allows the employer to decide from year-to-year whether to contribute on behalf of participants . It would make sense that this decision follows the company 's profitability for the previous year . While there are variations of both types of retirement plans , there are many similarities between profit sharing plans and 401k 's such as the ability to take out a loan or pull money out based on a narrow definition of hardship . Both can have non-elective employer contributions . An employer can offer both a profit sharing plan and a 401k . You might find this link to an IRS publication helpful regarding profit sharing plans . WEBSITELINK 