Investment Policy Statement

The following is a sample Investment Policy Statement (IPS). You must keep in mind that there is no perfect IPS nor will you find complete agreement on what one should contain, how it should be structured, or how it should be written. It is always advisable, before you adopt any IPS, to have legal counsel review.

At a minimum, the IPS should contain the following sections:

Investment Policy Statement for the XYZ 401k Profit Sharing Plan

Summary of Plan Information

Plan Sponsor: XYZ, Inc.
Plan Name: XYZ 401k Profit Sharing Plan
Date This Policy Statement Adopted: February 11, 2000

Statement of Purpose for the Policy and the Plan

The XYZ 401k Profit Sharing Plan Investment Committee (Committee) adopts this statement to provide a clear understanding of the Committee's investment policies, guidelines and objectives. XYZ 401k Profit Sharing Plan (Plan) is a defined contribution retirement plan available to all eligible employees. The Plan’s purpose is to provide a vehicle to accumulate assets to fund retirement needs on an individual basis for eligible employees. It is the intent of the Committee to provide a range of investment options that will enable participants to invest according to varying risk tolerance, savings time horizon, and other financial goals.

The Plan is designed to qualify in accordance with the requirements of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and Sections 401(a) and 501(a) of the Internal Revenue Code of 1986 (Code), as amended. The Committee intends also that employees’ before tax salary deferral contributions qualify under the qualified cash or deferred arrangement rules of Section 401k of the Code. The Committee further intends the Plan qualify as a "404(c) Plan" within the meaning of the Department of Labor Regulations under Section 404(c) of ERISA and therefore, no fiduciary shall be liable for any loss that results from a participant’s exercise of control over the investment of his or her participant accounts established pursuant to the 401k Plan.

404(c) Statement

The Committee intends to comply with the provisions of Section 404(c) of the Employee Retirement Income Security Act of 1974, as amended, (ERISA) and will select suitable investment funds intended to meet the "safe harbor" investment fund provisions of ERISA.

Because participants in the Plan ultimately are responsible for their investment decisions, the Committee aims to provide participants with the following capabilities:

The primary investment objective of the Plan is to maximize the value of Plan assets, which represent the separate accounts of each Plan participant. Since the Plan’s purpose is to provide retirement benefits, the Plan’s investment objectives shall be focused primarily toward maximizing investment returns over the longer term.

In order to maximize diversification potential and offer Plan participants the opportunity to appropriately manage risk, the Plan Sponsor will offer investment funds within the following five broad asset classes:

Approach to Selection and Termination

The Committee will review the investment objectives and risk characteristics, historical performance, and expenses related to each investment option made available under the Plan. Each option will be chosen on the basis of its compatibility with the Plan’s objectives, to satisfy the investment goals of both passive and active investors, and to facilitate the development of individual asset allocation strategies.

Generally, all funds are expected to perform as well as or better than their prescribed performance standards, net of fees. In any case, the Committee reserves the right to terminate an investment option at any time, for any reason. Once the decision to terminate an investment option is made, asset transfer and liquidation should be handled to the best advantage of the plan.

Monitoring of Investment Options

The Committee will review periodically the investment managers' progress in meeting the Plan's investment objectives. Generally, however, the Committee realizes investment managers should be given a full market cycle to achieve stated objectives, therefore greater weight will be given to three and five year performance. Investment options that consistently under perform in terms of risk and return will be carefully reviewed to determine if any action is warranted.

ON BEHALF OF THE XYZ INC. 401K PROFIT SHARING PLAN:

Name:
Title:
Date:

End of Sample Plan