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Thread: profit sharing plan and going out of bussines

  1. #1
    Flashaholic* matt_j's Avatar
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    Default profit sharing plan and going out of bussines

    If you worked for the company and they had a profit sharing plan and than company went out of business what happens to the profit sharing plan? I worked for a company and was vested about 80% when I got laid off. Company existed for few more months but now is no more. IS profit sharing plan put away like an investment that they can't touch or is it one big spending account? I can't seem to get in touch with anyone from my old job at least until middle of next week.

  2. #2

    Default Re: profit sharing plan and going out of bussines

    Hmmm, although I'm far from being an expert (no Holiday Inn stays, no playing an expert on TV, no nuthin'), it would seem that the term, "profit sharing", literally means a sharing of any *profits* the company makes. So if they go out of business, obviously not much in the way of profits would be shared. JMHO though...

  3. #3
    *Flashaholic* gadget_lover's Avatar
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    Default Re: profit sharing plan and going out of bussines

    It depends on the plan.

    If the money goes into a 401K, it's yours to keep if you are vested. If it goes into an ESOP (Employee Stock Ownership Plan) the stcok may be near worthless.

    My stepdad retired with 5,000 shares of a restraunt that went bankrupt. He did not sell it in time. It was sold for 5 cents a share.

    There should be a plan administrator that you can talk to.

    Daniel

  4. #4
    Flashaholic*
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    Default Re: profit sharing plan and going out of bussines

    Most profit sharing plans are treated like investments and are protected. They can go sour from poor investments or mismanagement.

    Let me put it another way - if the money still exists, you're owed your share. The owners can not have it squirreled it away for themselves and deny others that are vested.

  5. #5
    Flashaholic*
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    Default Re: profit sharing plan and going out of bussines

    Note to self: This would be a good reason to take your money with you when you leave.

    Good luck, I hope you get what you are owed.

  6. #6

    Default Re: profit sharing plan and going out of bussines

    If it is a true profit sharing plan, once the money has been contributed the "company" can not touch it. They can not borrow or use that money once it has been "contributed". As long as they didn't make bad investments and lose everything because of poor management, the money should still be there. It's called a profit sharing plan because a company can make contributions to the plan based on the year end profits. There have been years when we've gotten a contribution but lost money on the investments within the plan. We've gotten no contributions but made money on the investments.

    Eric

  7. #7
    Flashaholic BF Hammer's Avatar
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    Default Re: profit sharing plan and going out of bussines

    Try to dig up any old paperwork or annual account report you may have received regarding this plan. There undoubtedly is an investment agent (a bank or financial advisor) listed. Try to call or write that contact, explain your situation, and see if you can get your questions answered. The plan where I work only will distribute funds to an individual (person, former employees wanting to take his money out of the plan) on the anniversary date of the plan's start. The money is tied up in the investment for the rest of the year.

    I'll wager the gears are in motion for the investment agent to disolve the profit-sharing plan and distribute the funds to the account holders on the anniversary date. Just make sure they know you are in the account.

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