Understanding Fund Participation Rules for Owners and Shareholders

Posting by Ron Chandler, CPA

Many Funds allow owners of shareholders of a business to participate in the Fund. As the auditor, make sure that you have a full understanding of the particular Funds rules or requirements for their participation. Many small companies find it easier and more cost effective to “be part of the union” Plan, but may not be eligible because of the Fund’s rules. Recently we found a situation where the owners were participating and the Fund specifically excluded their participation, which then created many problems. Most Funds have separate participation agreements for owners, so it is important to be aware of this from the start.

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