Qualified Employer Security

[Gary]

The following scenario is presented in an effor to better understand the application of Qualified Employer Secrity as a pension investment.

Say a one participant/owner DB plan has $400,000 in plan assets.

Say this owner has another company (Company B) in which he owns 100% of company.

Say Company B is worth $500,000.

Say the owner wants to use $30,000 of pension assets to invest in Company B.

It appears that the investment satisfies the 25% limit under ERISA 407(d)(5) and 407(f), since $30,000 is less than 25% of value of Company B.

It appears that the 10% DB investmeent limit under ERISA, since $30,000 is less than 10% of $400,000 (plan assets).

However, it is clear that the 50% requirement under ERISA is violated, since the issuer/owner of Company B owns 100% of Company B.

What if the owner owned only 50% of COmpany B and the other 50% were owned by a partner.

Would this investment be an acceptable pension investment of Qualified Employer Securities? Or is there more to it?

Thanks.