Madoff investment as a prohibited transaction?

[Peter Gulia]

ERISA Advisory Opinion 2000-10A (July 27, 2000) [http://www.dol.gov/ebsa/regs/AOs/ao2000-10a.html] was about whether an IRA's investment in a partnership managed by Madoff might be a prohibited transaction.

One wonders whether the investor went through with it?

[smm]

My guess would be that he did - my sense is that as a current investor, he was happy with the overall return. Why else would he have bothered to apply for an advisory opinion from the DOL on the PT issue?

[Guest mjb]

ERISA Advisory Opinion 2000-10A (July 27, 2000) [http://www.dol.gov/ebsa/regs/AOs/ao2000-10a.html] was about whether an IRA's investment in a partnership managed by Madoff might be a prohibited transaction.

One wonders whether the investor went through with it?

why wouldnt he have done it since he was getting a 12% return with no risk?

[Peter Gulia]

Sometimes a lawyer suggests that a client seek an ERISA Advisory Opinion because doing so is cheaper than buying a lawyer's opinion, especially if the circumstances involve a significant risk exposure for the lawyer.

In AO 2000-10A, the Department did not issue the requested opinion, and also mentioned some of the ways that the IRA's investment might be a prohibited transaction.