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I understand your logic - but as I indicated above, I think in almost all cases, the employer (through it's employees) is *still* going to be a fiduciary - maybe not THE Plan Administrator, but still a fiduciary, and as such, may still have liability. Plus all of the individuals actors who perform fiduciary functions (whether they know it or not) can claim the title as well... I disagree with the risk transference concept. The concept of co-fiduciary liability comes into play as well, and even if their is a "proper" delegation to a 3(16), many other factors come into play with respect to other fiduciaries, etc. I have yet to see a case where there was such a clear cut case of proper delegation (without interference) such that another fiduciary would be dismissed from a lawsuit. It may be that we haven't seen any "3(16) cases yet - but in my experience ... well let's just say, I wouldn't want to defend the plan sponsor in that situation.

Just because they did it, doesn't make it right or legal.

Business owner(s) and spouse if only one owner is (are) virtually always trustee on our plans (all small - max a few hundred participants). Little discussion on that.

This is so fundamental (Accounting 101). Where he got his information is the question; any google search would instantly give him the correct answer. To do what he wants is TAX FRAUD. He's a lawyer? Use that phrase with him.

Over the years I have had a lot of clients with real property in their qualified retirement plans. Usually it was for DB plans, but I have seen a few DC plans have it. I never saw it work out well in the DC plan context. Then again, few plans would have come to me with real estate issues if it did work out well. I have, of course, never seen any plan hold a participant's "second home," or any single residential dwelling for that matter regardless of whose home it was. Obviously plans can hold land. There are a lot of traps, and it generally works only if the land is part of a much, much larger diversified portfolio. Obviously plans cannot own a participant's "second home." In addition, any small to medium-sized plan that owns real property is practically begging for a DOL audit.

I agree with Austin3515 except I am going to add a few more things to the list, just because I know from nearly 30 years of experience where the errors typically occur: who are the Trustees? How is compensation defined - particularly how are bonuses/commission payments being treated? timing of termination distributions? MOST IMPORTANT - who owns the business; are there family members; do owners own any other businesses, etc.

I like this statement made at the 2018 Enrolled Actuaries Meeting: "you can have land in your plan, or you can have me as your actuary, but you can't have both."

Bpenfold: It ISN'T allowed. Perhaps the two prior responses weren't clear enough. What he wants to do is a prohibited transaction and not allowed. Hopefully that is now crystal clear. Larry.