Plan Asset Rule Follies

commercial buildingIn our practice, we occasionally see transactions structured by other financial planners attempting to circumnavigate the Prohibited Transaction Rules found in Internal Review Code sec. 4975, by using the thresholds found in the “Plan Asset Rule.” Dept. of Labor Regs. Sec. 2510.3-101.  As is typical with most prohibited transactions, these arrangements often involve the IRA or Plan owner on both sides of the transaction, e.g., with the retirement funds being used to benefit or facilitate a transaction in which the IRA or Plan owner, or some related entity is involved.  An example of this type of transaction is when IRA funds are used to purchase a building, which is then leased to the IRA owner or his business. [Read more…]