SERP question

[fidu]

Can a SERP plan invest in a tax qualified fund w/o disqualifying the fund,

my inclination is no since it is not a qualified plan but would like second,third opinions please

thanks

[david rigby]

Pardon my ignorance, but what do you mean by "tax qualified fund?"

[mbozek]

Since a Supplemental Executive Retirement Plan ( SERP) is not a qualfied plan, its assets cannot be commingled with the funds of qualified plan.

[david rigby]

Or maybe the question relates to the possible investment in tax exempt securities?

[fidu]

nope. it was about whether placing the serp plan's money into a a tax preferred commingled fund would disqualify the fund, not regarding investments in a tax exempt security which, of course they are permitted to do.

thanks as always - i agree.

[RCK]

Pardon MY ignorance, but why does a SERP plan have assets?

RCK

[jpod]

I still do not know what you mean by a "tax qualified fund" or a "tax preferred commingled fund."

If, by chance, you mean a fund held in a trust that is deemed to be tax-exempt by virtue of Rev. Rul. 81-100, then the answer is that only 401(a) plans, certain governmental plans and IRAs can be investors in such a fund [and it's questionable whether an IRA could actually invest in such a fund due to securities law issues].

[fidu]

yes. a collective fund which receives its preferential tax treatment pursuant to rev ruling 81-100.

the SERP plan has assets held in trust for the beneficiaries of the SERP plan.

[mbozek]

I thought that one of the requirements for a trust to qualify under 81-100 was that it was limited to investments from qualified plans and IRAs. Non qualified plan assets are not permitted in a trust that qualifies under 81-100.

[fidu]

i totally agree.

that takes us back full circle.

my question was whether the SERP was:

A - qualified

B - permitted to invest in an 81-100 vehicle without screwing up the preferred tax treatment of the 81-100 fund.

since we have now established that the SERP is not qualified, it would jeopardize (pronounced "screw up") the tax preferred treatment of the 81-100 fund.

thanks again.