Generally speaking, a profit-sharing plan is a retirement plan that gives employees a share in the profits of a company. Under this type of plan, also known as a deferred profit-sharing plan, an employee receives a percentage of a company's profits based on its quarterly or annual earnings. A profit sharing plan accepts discretionary employer contributions, this means that the employer/business decides how much it will allocate to each employee. A company that offers a profit-sharing plan adjusts it as needed, sometimes making zero contributions in some years. In the years when it makes contributions, however, the company must come up with a set formula for profit allocation. These plans are different than such things as a 401(k) or other similar plans, because 401(k)s and other similar plans include the personal contributions of the employee.
This is a very complicated area of the law that can impact property division, alimony and child support. At North Oakland County Michigan Divorce Law, our divorce lawyer in Oakland County will guide you through the process, represent your interests and has the knowledge and experience required to handle these issues. Contact us today online or at (248) 608-4123 to schedule a consultation.
GM & Ford Profit-sharing Payments and Accounts
According to the Buffalo News, profit-sharing payments are part of the UAW's labor contracts with GM and Ford. Autoworkers receive $1,000 for each $1 billion in North American profits recorded by their employer, before interest and taxes. GM earned about $13 billion in North America in 2022 and Ford earned about $9.2 billion. This resulted in hourly workers at both companies receiving thousands of dollars in profit-sharing checks, some of these payments were up to $12,750 before taxes, which was a record-high amount. These payments are typically included in the employees pay in February of the year following that in which they were earned (so the 2023 check is for payments earned while working in 2022).
How Will a Divorce Court in Michigan Handle Such Payments or Accounts?
First the court must consider how or when the profit-sharing benefit was earned. If it was earned in part or in whole while the parties were married, then the court may order the employee to share up to 50% (or more in some rare instances) of that payment or account depending on how much of the year the employee was married to the non-employee spouse. However, some payments that might appear to be profit-sharing payments may not be classified as such in a divorce case and might be awarded 100% to the employee spouse. Finally, because of the possibility for future payments, if there are children and/or spousal support (also known as alimony), the court or the divorce lawyers will have to determine how to handle such payments in the future for the purpose of calculating child support and alimony.
While most likely these payments will be considered income for the purpose of child support and/or alimony, there are several ways to handle these profit-sharing accounts, which typically require the assistance of an attorney that is well-versed in family law. If you or your spouse is employed by a company that has a profit-sharing account and a divorce appears imminent, please do not hesitate to contact us online or call us at (248) 608-4123 to schedule a consultation.