What is a Profit Sharing Plan?

A profit sharing plan is typically a contribution plan that lets companies help employees save for retirement. As with profit sharing plan, contributions from the employer are at the discretion of the employer or company. A company does not need to be profitable to have a profit-sharing plan.

Contribution Limits

There is no set amount that must be contributed to a profit-sharing plan each year. However, there is a maximum amount that can be contributed to a profit-sharing plan for each employee. The amount fluctuates over time with inflation. The maximum contribution amount for a profit sharing plan is the lesser of 100% of compensation or $54,000 in 2017. The amount of your compensation that can be taken into consideration when determining employer and employee contributions is limited. The compensation limitation is $270,000 in 2017.

Types of Gold You Can Invest in Through a Profit Sharing Plan

Your Profit Sharing Plan investment choices are limited to what your plan provider makes available to you. In many cases, you will not be able to direct the investments made on your behalf through your plan. Legally, however, Profit Sharing Plans have the option of offering the following types of investments:

  • Individual stocks
  • Individual bonds (corporate and government)
  • Options
  • Mutual fund shares
  • Exchange Traded Fund (ETF) shares

As you can see, gold or precious metals didn’t make this list. This means that unfortunately, you cannot invest in physical gold bullion (or any other approved investment metal) through a Profit Sharing Plan. The only way to invest in gold through a Profit Sharing Plan is to purchase stocks in gold mining companies or to purchase a mutual fund that includes gold mining stocks. This strategy is referred to as buying “paper gold.”

Does Gold and Precious Metals Qualify for Profit Sharing Plan? Retirement Plan Contribution Chart