100% of Plan Assets in Annuity Contract

[chris]

Client's profit sharing plan has invested all of the plan assets into an investment variable annuity contract. the annuity contract is on a seven year schedule and provides for participants to withdraw a certain % of their account balance per year without penalty. If withdrawal is greater than that % certain penalties apply. Also, upon death, a participant's beneficiaries are entitled to market value of the account or the original investment value of the account plus a guaranteed % per year. Isn't there a diversification issue with respect to the sole trustee's potential liability???

[mbozek]

Are all of the plan assets invested in one type of investment or does the VA contract offer investment choice among several options by fiduciary or participants? Client should seek professional investment advice regarding diversification if all assets are in one investment option.