Plan Investments

[Guest Trainer]

Are esoteric types of plan investments (such as art work) specifically prohibited by law? If so, is that prohibition from ERISA or securities law?

[mbozek]

ERISA does not proscribe any particular types of investments as long as the plan assets are diversified and the investments are prudent. However under IRC 408 (m), certain types of collectibles such as art, rugs, antiques stamps, coins and alcoholic beverages are prohibited investments for IRAs and employee salary reduction contributions to 401(k) plans. The prohibition does not apply to certain coins such as american eagle coins, .999 fine silver coins, platinum coins and gold, silver, platinum or palladium bullion as well as state coins.

[Mike Preston]

mbozek wrote:

"However under IRC 408 (m), certain types of collectibles such as art, rugs, antiques stamps, coins and alcoholic beverages are prohibited investments for IRAs and employee salary reduction contributions to 401(k) plans."

The bolded section should be replaced with a reference to individually directed accounts. There is no requirement that salary deferrals be made to an individually directed account plan. Neither is there a requirement that only 401(k) plans provide for individual direction.