more-arw search

Q&A Forum

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.

Answers

Topic Expert
Keith Perry
Title: Consulting CFO and Business Operations A..
Company: Growth Accelerator
(Consulting CFO and Business Operations Advisor, Growth Accelerator) |

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 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:
http://www.dol.gov/ebsa/publications/profitsharing.html

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

Cheers

Keith

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.

1205 views

Get Free Membership

By signing up, you will receive emails from Proformative regarding Proformative programs, events, community news and activity. You can withdraw your consent at any time. Contact Us.

Business Exchange

Browse the Business Exchange to find information, resources and peer reviews to help you select the right solution for your business.

Learn more

Contribute to Community

If you’re interested in learning more about contributing to your Proformative community, we have many ways for you to get involved. Please email content@proformative.com to learn more about becoming a speaker or contributing to the blogs/Q&A Forum.