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Posted

I know ESOP Trustees are required to invest ESOP cash (that is not used to buy company stock) in a "prudent" manner.  Other than cash instruments (CDs, CDARs, Money Markets, etc) where else are they allowed to invest cash?  Or maybe better stated, what investment options are allowable to the ESOP Trustees?

Thanks in advance for your feedback.  

  • 3 weeks later...
Posted

They can invest it any place a qualified plan can invest the cash as long as it is prudent.  In many ways if a Profit Sharing plan can invest the cash in a given place so can an ESOP. There aren't special rules I am aware of for ESOPs.  It is the "prudent" standard that could get tricky.   If the cash is going to be used to fund payments and the share are being recycled can there be a justification for more short term investments for example and still be prudent?   You can get a pretty good debate with that question at an ESOP conference.  

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