LOAN TO PLAN FOR REAL ESTATE PURCHASE

[Gary]

Clients often like to use pension assets to purchase real estate. They ask whose name can be put on the loan application, since they cannot get a loan to the pension plan.

Is there any reason why a participant/owner/trustee cannot use his name on the loan app., assuming the investment is otherwise purely for the pension plan?

Same question for an employee/non-owner/participant?

Thanks.

[mwyatt]

Is this question for real?

Gary, you've got to be kidding me here. Does mortgage fraud (let's not even go through the qualified plan arena palenopy of laws) mean anything? So your client is going to willingly (clearly a Party-In-Interest) put his name on a loan that will be paid back by a qualified plan? I sincerely hope this is a hypothetical question!

[Effen]

I am starting to wonder if Gary's handle is being used by someone other than Gary. A few of his last questions have been a little "non-Gary'ish"?

[mwyatt]

Also noticed the "SHOUTING" in the subject line... a new trend for Gary.

[Gary]

It is only very recently that I have been involved with one-participant plan administration and pension plan investments for such plans in particular.

I realize that my knowledge is very limited in this area, thus the reason I am trying to get educated. I apologize if I offended anyone because of my lack of knowledge in this area and my use of capital letters was not an attempt to shout, as I didn't realize (until now) that that is the perception it conveys. Lesson learned and again I apologize if I offended anyone.

Please feel free to email me directly if you would like to address any of these aspects further.

Since I did not observe a suggested alternative method for accomplishing the investment I stated, I will research on my own.

Also, if anyone knows of any suggested reading materials on the subject, I would greatly appreciate such recommendations.

Thanks for your patience.

[david rigby]

You can probably find other similar discussion threads with the Search feature. I suggest using "real estate" as the keyword.

[AndyH]

Gary, these guys have had TOO MUCH EGGNOG.

But, as is implied, you are dangerously approaching if not past prohibited transaction territory, where the big fences with the scarecrows are.

I suggest that you get a reference book (Pension Answer Book, Fiduciary Anwser Book, DB Anwser Book, ERISA Outline Book) and read through prohibited transaction and fidiciary responsibility sections before you comment to any clients about such issues, or maintain relationships with clients that do such things. There may be other reference sources but I am familiar with these.

Even if this stuff is legal it is still not good for DB plans.