Small businesses invest plan assets in a variety of funding vehicles. The trustee of the plan (normally the business owner) is responsible for the investment of plan assets "prudently" and "for the exclusive benefit" of plan participants. This is referred to as trustee directed and means the trustee can be held responsible for the performance of investments.
Another option of investing is referred to as participant directed election. This format allows the participant to direct the investment of their accounts. The trustee (or employer) will determine the investments the employees can choose from and is responsible for educating the employees on the investment options.
Generally, the investment powers (and limitations) for the trustee are contained in the trust document. Investments might include mutual funds, certificates of deposit, real estate, stocks, bonds, annuities, or life insurance contracts.
Businesses may also consider investing a portion of the funds in life insurance because it provides several advantages in a qualified plan. Insurance provides an immediate, sizable death benefit for participants not living to retirement with a significant portion of the death benefit being income tax free. The return on life insurance cash values can provide balance to other, more aggressive plan investments and premiums can be paid out of the plan directly, which is generally considered a cost-effective approach to purchasing insurance.
Employee Incentive Plans, Inc (EIP) can provide you with various investment options for your plan. EIP will help you to determine the right choice of investments as well as create an investment philosophy for the plan.
The Enhancer Platform
The Enhancer is EIP’s own open-architecture trading and custodial platform. Employers are now able to offer participants investment choices from a vastly larger universe compared to other trading programs. The Enhancer will also bring a more robust website for participant research as well as trading and investment direction. On a fiduciary level, trustees will be provided detailed plan investment performance and allocation summaries to monitor investment selection and to allow for prudent investment alternatives.
The Enhancer offers one of the largest 401(k) custodial and trading platforms in the nation. The robust program allows participants easy access to fund research and availability, while also making the process of trade execution much more user friendly. The open-architecture trading system allows investors to use a vast array of different investments across multiple product sponsors.
For individual participants who feel unprepared or uncomfortable managing their own investments as part of their retirement plan, our advisory services provide a streamlined process for managing the account on behalf of the participant. This option offers participants the ability to have professional money management for their retirement plan accounts along with both investment selection recommendation and trade execution. To obtain additional information about the Bridge Portfolios or to enroll in the professional money management services, please call (512) 258-4040 or email us.
For individuals who wish to personally invest funds from outside their retirement plans, we offer a comprehensive investment solution. We offer investment plans including Individual Retirement Accounts, 529 Plan college savings accounts, as well as personal investment accounts for individuals, families, and corporations.