Generally the same kind of investment options available in a 401(k) are present in these plans. Money Purchase and Profit Sharing Plans have several investment options, including stocks, bonds, mutual funds, fixed accounts, annuities, certificates of deposit, and a few others.
Keep in mind that Money Purchase and Profit Sharing Plan investments are determined by the financial institution at which your plan is established. If you are opening a Money Purchase/Profit Sharing Plan, be sure to find out what investment options the financial institution offers and what fees may be charged to accounts per year, per trade, etc.
It might also be worth finding out what the minimum buy-in to the investment options is, since some may require anywhere from $1,000-$5,000 to purchase certain mutual funds or other investments. All employees must have the same investment options, in accordance with ERISA.
The investments in these plans are held in separate accounts for each employee, and the investment risk falls on the participating employee. It is wise to seek investment advice if you don’t know what you’re doing, but it’s also important not to over-think or over-trade it. Sticking with an allocation and rebalancing to keep it is a good strategy.
What are the Vesting Rules for My Money Purchase/Profit Sharing Plan?
How Does a 401(k) Compare With Other Retirement Plans?