Opinion ID: 1716621
Heading Depth: 1
Heading Rank: 2

Heading: The Profit-sharing Plan

Text: T. L. James & Company, Inc., first established a profit-sharing plan for its employees on January 1, 1945. The plan was restated in its entirety on December 31, 1955. It is designated as the T. L. James & Company, Inc., Employees' Profit-Sharing Plan. The plan, insofar as it is pertinent here, was established and maintained for the purpose of enabling employees of the company, who are eligible to participate, to share in the profits of the company through the distribution to them or their beneficiaries of the corpus and income of a trust fund established and maintained in conjunction with the plan. Only those persons whose customary employment with the company calls for not less than 20 hours of work in any one week for not less than six months in any calendar year are eligible. They are referred to as participants. Based upon a schedule established in the plan, the company obligated itself to contribute to the trust from the net profit a percentage progressing from 5% not in excess of $100,000 to 30% in excess of $500,000. The plan was amended in 1966 to provide for a company contribution of 20% of net profits after deducting 5% after taxes of the net worth of the company under conditions set forth in the amendment. The employee makes no contribution to the plan. An advisory committee established by the plan is charged with maintaining a separate account for each participant. Each account is periodically adjusted on the basis of the fair market value of assets in the trust fund. The method of accounting is set forth. Retirement or death brings about a determination of the percentage of the participant's account which is then vested. A schedule for this calculation graduates until after 20 years or more 100% of the account is vested in the participant. The funds are, in effect, dedicated to the employee, but are held in trust by the trustee. However, the funds cannot be withdrawn until resignation, retirement or death. In conjunction with the establishment of the plan, the company entered into a trust agreement with a Shreveport bank, the trust to be administered in accordance with the trust agreement which is subject to amendment. Under the terms of the trust agreement the company may remove the trustee and appoint a successor. All contributions made by the company under the plan are paid into the trust fund established under the trust agreement, and all benefits payable under the plan are paid from the trust fund. The company has no right, title or interest in the trust fund or in any part thereof, and no part reverts to the company. Company officers and employees are appointed as the advisory committee and administer the trust. They may direct the trustee to make loans to the employee participants under uniform terms to the value of the participants vested interest in his account. Loans may be made to participants to enable them to meet emergency conditions in their finances, on account of illness, disability, to preserve their home, or for the schooling of their children. A participant may designate, revoke or change a beneficiary or beneficiaries. If a participant dies without designating a beneficiary, the committee may distribute the credit balance of his account to the next of kin or the legal representative or representatives of the estate of the last to die of the participant or the beneficiary. No participant or other person shall have any interest in, or right to, any part of the trust fund, or in any of the assets thereof, except as provided in the plan. No account in the fund is subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt to do so shall be null and void; nor shall any such account be liable for, or subject to, the debts, contracts, liabilities, engagements or torts of the person entitled to the account. The plan is subject to termination by the company at any time, and it may amend the plan in any respect at any time, provided that no part of the trust fund may be diverted from the exclusive benefit of the participants, their beneficiaries or their estates.