Prohibited Transaction Issue

[chris]

Plan participant has purchased beach property through his directed investment account in PSP. He does not personally use it or otherwise benefit from it. Plan allows for in-kind distributions. Would IRC §4975(d)(9) exempt the distribution of the beach property to him assuming there is an otherwise distributable event (ie, termination of employment, retirement....)? He has been told that to receive the real estate even as part of his distribution would be a prohibited transaction..... Thanks.

[Ron Snyder]

I believe that it can be done, but I would certainly have an ERISA attorney guide the plan and the participant through the process. Many questions and conflicts of interest to deal with here. (Fiduciary duty toward participant vs. toward other participants? Distribution in kind rules, including tax basis upon distribution. Circuitous PT? etc.)