Small plan audit waiver question

[Belgarath]

I just love this stuff...

Suppose you have a plan with 50% of it's assets in a Real Estate Limited Partnership. The preamble to the DOL regs (2520.104.46)

gives an example where such a partnership is NOT a "qualifying plan asset." My question is, does this necessarily have to be the case? For example, suppose the Limited Partnership is purchased through a registered broker-dealer, or through an organization authorized to act as Trustee for IRA's under section 408 of the IRC? These are "regulated financial institutions" for purposes of the SPAW requirements. Would the Limited Partnership then count as a qualifying plan asset, or not? I'm inclined to think that the "held by" requirement doesn't simply mean "purchased through" and that therefore these wouldn't qualify, unless you had, say, a bank as Trustee. Since the bank is a a regulated financial institution, and would hold title in this case, then it should qualify. Any opinions out there? Thanks!

[JohnCheek]

I think the difference between "held by" and "purchased by" is pretty clear, and there is nothing you can do with a real estate limited partnership to conveert it into a qualifying asset.

So, your choices are 1) do an audit, or 2) buy more bonding.

Of the two, the bonding is cheaper.

[david rigby]

3. invest in some other assets (to avoid this problem in the future).