Contributing to P&G’s Profit Sharing Trust (PST)
It’s PST contribution season! And nothing kicks off a new fiscal year like your annual Profit Sharing Trust contribution—a contribution made by P&G on your behalf.
Is the PST contribution made up of all P&G stock?
Not technically. The contribution is a mix of preferred shares and cash. The cash component of the contribution purchases shares of P&G common stock.
What’s the difference between preferred shares and common stock?
Common stock is exactly what it sounds like—common. These stocks trade on the stock exchange and are available to any and all investors. Preferred shares are only available within the PST plan, have a price equal to that of the common stock, but have a cost-basis of only $6.82 which presents extremely powerful planning opportunities for P&G retirees. We go into much more detail on preferred shares and ways to use them in our Frank Duke Method series—we recommend checking it out!
How do I know what my PST contribution will be?
Your contribution amount will depend on a few different factors: your hire date, your length of service, and your base salary.
It makes me nervous having this much exposure to P&G stock. Can I diversify my PST?
Yes! You can change how the vested portion of your PST is invested. The investment alternatives that are available to you vary based on whether or not you are at least 50 years old. Disclaimer: We strongly recommend that you speak with a financial advisor regarding your PST allocation before making any changes!
I’m not 50 years old yet, how can I diversify my PST out of P&G stock?
If you’re not 50 years old yet, the investments that are available to you are referred to as the core investment alternatives. These core offerings are composed of P&G common stock, bond funds and other fixed income vehicles. You can have 100% of your vested PST balance split amongst the core investments.
I’m over 50 years old, how can I diversify my PST out of P&G stock?
If you’re over 50, then you have access to both the core and non-core investments. Again, the core investments are P&G common stock, bond funds, and other fixed income vehicles. The non-core investments are non-PG equity funds, this includes index funds and pre-mixed portfolios. If you choose to diversify into a non-core investment, then 40% of your PST must remain invested in P&G stock (Common or Preferred)!
Well, I want to diversify…should I sell my common or preferred shares?
It is generally in a P&G employee’s best interest to sell their common stock and to continue holding preferred shares, which offer a very unique retirement planning opportunity involving qualified lump sum distributions (QLSD). If the preferred shares are sold, you cannot buy back into them; however, you can buy back into common stock.
Where can I learn more about what to do with my PST?
If you want to read about possible strategies involving your PST, specifically the Frank Duke Method, then we recommend you check out our Frank Duke Method series. If you’d like to chat with a financial advisor regarding your PST and your plan moving forward then we’d encourage you to reach out to any of our team members.