We are a small company and want to set up a profit sharing plan for our employees. What do I need to do? Does it have to be managed by a bank or brokerage firm? Thanks.
Need help setting up a profit sharing plan
Answers
Anon:
* You can do it with a third party, but you don't need to (depends on if you have the admin bandwidth to run it).
* You will need to escrow the funds, so you need to have a trust account. Your banker can set this up for you.
* You also really should have a pro look at the terms. Not that it is hard, but everyone makes mistakes. I use one of my
* Depending on the amount of $ involved, you might consider bringing in a pro (a good money manager can return 6%+ these days, but you've got to have enough assets to be worth their time).
So, with those caveats, go it alone (or if you don't pass one of the tests....hire it out).
DOL has published basics here:
http://www.dol.gov/ebsa/publications/profitsharing.html
Feel free to reach out if you want the CPA, legal or wealth
Cheers
Keith
1
Thank you. This is very helpful.
We set ours up as part of the 401(k) plan, therefore reducing much of the administrative burden since the rules governing the plans are similar.
1
Thanks - I'll look into a 401k.
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Human Capital