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With employer match, the employer is committing to
contribute a set percentage (up to a specified limit), whether the
company is doing well or not. With profit sharing, the employer
is offering a discretionary contribution dependent upon the
company's profitability.

Keep in mind that in some companies, even the employer match may also be discretionary. You have to check the wording carefully.

A profit sharing plan is a more typical way for a company to protect itself from contributing in a down year, but in up years, the contribution can be substantial. We've experienced both plans, and if you're lucky to work for a growth company, the profit sharing can be wonderful bonus to your retirement funds. My husband has received matches equal to 100-150% of his own yearly contributions -- and even in the rare down years where he rec'd nothing, he's still way ahead than with a conventional match program.

Study your own employer's financials -- a conversion to profit sharing might be a very good thing :-)


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