Profit-sharing contributions are a type of employer contribution made to a retirement plan, like a Solo 401k, based on the business’s profits. Even though the name suggests they’re tied to profits, the business doesn’t actually have to be profitable to make them. These contributions are made by the employer (which could be you, if you’re self-employed) and are calculated as a percentage of compensation. They’re optional each year, which gives business owners flexibility—some years you can contribute more, other years less or none at all. Profit-sharing can help grow retirement savings faster when the business is doing well.