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Hello again.

I'm back with another question regarding
setting up a retirement plan for my one-person

Since I'm leaning towards the profit-sharing
or money-purchase plan, there is going to
be up to $30,000 invested each year. Apparently
I have the option of putting it in a straight
mutual-fund plan (some up-front load), or
into a plan that allows me to buy stocks.

The catch? The stock variety will cost 1% of
assets up to the first $250,000 in the plan!
If I go beyond that amount, it falls to a fixed

This seems high to me. Even in the first year,
I will probably be trying to reach at least a
20K investment, and will therefore have to put
in at least an extra $200 to pay this fee. This
is on top of the standard trading commissions
that the brokerage house charges. As the balance
in the account increases year over year, the
fees sound outrageous! It could reach $500 in
the second year itself, if things go well.

It's being described as an "advisory" fee,
but I plan to do my own research, so I'm not
really going to be relying on their "advice".

Is this a normal amount to pay? Do banks set up this
sort of plan without me having to go through an
intermediary and pay him/her the 1% or whatever?
I don't mind paying trading commissions (well, I
do, but there are not many ways to totally eliminate
them), but these extra fees just sound like padding
to me.

Comments? Advice? All cheerfully welcomed.

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You have to ask if you are really getting your money's worth for that "advisory" fee.
I would explore the mutual fund option a little more before making a decision. Most funds will waive the front load for a corporate retirement plan account. IF you are dealing with an Advisor have him check out Oppenheimer Funds, AIM, American Funds or even Alliance Funds. If you are doing this solo, call Fidelity, Vanguard and T. Rowe Price to name just a few. Compare the expense ratios that are on some of these funds agains the "advisory" fee and trading costs you would have to pay under the other arrangement.
Hope this helps.

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I have a question for you; Why a profit-sharing-plan or a Money-purchase-plan?

You can establish a SEP IRA (Simplified Employee Pension) and contribute 15% of your income upto $30,000. A SEP is very similar to a PSP or MPP accept you have NO administrative cost NO Reporting to file.

With a PSP and MPP you have administrative cost and government reporting to file.

Secondly, you should not have to pay a 1% fee if you are doing the work to pick stocks. If you are not going to pick the stocks then go with a mutual fund.

Good Day Fool
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