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Need help setting up a profit sharing plan

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.


Topic Expert
Keith Perry
Title: Director of Global Accounting
Company: Agrinos, Inc.
(Director of Global Accounting, Agrinos, Inc.) |

* 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 CPA connections who specializes in this area.
* 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:

Feel free to reach out if you want the CPA, legal or wealth management referral.



Elaine Banks
Title: VP Finance
Company: Stress Recess
(VP Finance, Stress Recess) |

Thank you. This is very helpful.

Topic Expert
Brenda Goudey
Title: CFO/VP of Finance
Company: KDR Designer Showrooms
(CFO/VP of Finance, KDR Designer Showrooms) |

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.

Elaine Banks
Title: VP Finance
Company: Stress Recess
(VP Finance, Stress Recess) |

Thanks - I'll look into a 401k.


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