Profit sharing plan investments

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Jun 5, 2007 1:23 pm

I have no experience setting up profit sharing plans.


This small accounting firm has a bank account for their profit sharing plan basically earning zero in a checking type of account.


They would like to open an account with my firm.


Can there be limitations on how they can invest this money?  Is there usually some kind of "investment policy statement" that could preclude them from investing in anything considered "risky"?


Just wanted some feedback on how this usually work in a real world scenario before I meet with client.


scrim


Jun 5, 2007 1:31 pm
scrim67:

I have no experience setting up profit sharing plans.


This small accounting firm has a bank account for their profit sharing plan basically earning zero in a checking type of account.


They would like to open an account with my firm.


Can there be limitations on how they can invest this money?  Is there usually some kind of "investment policy statement" that could preclude them from investing in anything considered "risky"?


Just wanted some feedback on how this usually work in a real world scenario before I meet with client.


scrim




Accounting firms maintain a list of companies/funds that the EE's cannot invest in. Ususally these are audit clients. Your small firm may not even have a audit practice. Just to look smart, ask them for that list.


The PSP vendors should have people who can talk to the ER and gather the necessary data. Use them.

Jun 5, 2007 1:38 pm

Pardon my ignorance but what are the abbreviations:



EE


PSP


ER


scrim

Jun 5, 2007 1:44 pm
scrim67:

I have no experience setting up profit sharing plans.


This small accounting firm has a bank account for their profit
sharing plan basically earning zero in a checking type of account.


They would like to open an account with my firm.


There are all sorts of dedicated profit sharing plans (PSP) administrators out there.


IN the mean time, you could upgrade them to a money market/cash management account

Jun 5, 2007 1:54 pm
scrim67:

Pardon my ignorance but what are the abbreviations:



EE


PSP


ER


scrim



Employee


Profit Sharing Plan


Employer