Limited Partnership

[Guest dscurtis]

Client currently sponsors a Profit Sharing with MPP rolled into plan and wants to add a CODA feature. The plan purchased an LP about a year ago as an asset registered to the profit sharing plan. Their current document does not allow for any loans or inservice withdrawals; must be separated or retired in order to receive a distribution. In order to "fit" into a specific box for new administration; the limited partnership can not be part of the plan under the umbrella of services and the advisors is trying to figure out a way to eliminate the limited partnership. Is it possible for one of the owners to purchase the limited partnership from the plan, with his personal funds? Wouldn't this be viewed as a prohibited transaction? Any thoughts would be greatly appreciated.

[Locust]

Thoughts - sale to an owner would be prohibited; sell it to a unrelated third party; distribute it to an owner who is due payment in an in-kind distribution; set up the lp in a separate trust with an owner as the trustee; get an exemption from the DOL if nothing else works; consider a new recordkeeper/trustee/bundled person.

[Guest dscurtis]

it gets more interesting..... it turns out that the LP should never have been part of the plan (originally purchased 11/04) since it was a private LP. Their resolution is to reimburse the plan with the current value of the LP ($50,000) and hold the LP outright in a brokerage account. However, since this LP is contingent upon the purchasers net worth, it will be registered in one of the owner's name. I'm assumming that the plan will need to go through one of the correction programs prior to the reregistration of the assets to avoid the prohibited transaction. Is that correct?