Frequently Asked Questions
The concept of ERSOP® can initially be a bit difficult to grasp, but we are here to help you with any questions you may have. Below you will find answers to some of the frequent questions others have about ERSOP®. If you still have questions, please don’t hesitate to contact us so that we can help answer them.
- What Is An ERSOP® Plan?
- What Is the IRS' Attitude Towards These Plans?
- What About IRAs?
- Why Can't I Use A Self-Directed IRA?
- Can I Reimburse Myself For Any Fees?
- What Distinguishes the PLAN From the TRUST From the INVESTMENTS?
- Will I Need A 401(k) For My Employees?
- Why Does ERSOP Charge A Flat Fee?
- Why Does ERSOP Neither Pay Nor Accept Commissions or Finders Fees?
- Why Does ERSOP Not Serve As Trustee?
- Why Does ERSOP Not Sell Investments?
- How Does One Choose An Accountant?
Money in most IRAs may be rolled over into an ERSOP® plan and then invested in “qualifying employer securities.” Basically, only an inherited non-spousal accounts may not be rolled over. into an “eligible individual account plan.”
Our clients are, as the name suggests, entrepreneurs. As such, each is “an officer, director (or an individual having powers or responsibilities similar to those of officers or directors)” and therefore a “disqualified person” as defined in the Internal Revenue Code. Further, since an IRA is specifically excluded from the definition of an “eligible individual account plan” (as defined in ERISA § 407(d)(3)), any entrepreneurial investment of funds held within “self-directed IRA” would not be exempted from being a prohibited transaction as defined in the Internal Revenue Code. However, once those “self-directed IRA” funds are rolled over into an ERSOP® Plan, those same funds may then be invested in any entrepreneurial way. “Self-directed IRA” investments must be passive or they are a distribution subject to taxes and penalties.
The Plan is the document setting forth rules of eligibility, participation, contributions, benefits, discrimination, vesting, distributions and retirement. The powers and duties of the Trustee may be included in the Plan document but are often in a separate TRUST document. The Trust Fund (or the INVESTMENTS) is (are) the sum of the contributed and rolled over money under the terms of the PLAN held by the Trustee. The TRUST document describes the permitted investments. The ERSOP® plan TRUST document provides for the greatest variety of investments including “qualifying Employer securities.”