Prohibited Transaction?

[Guest notapensiongeek]

We administer a 401(k) profit sharing plan where the plan sponsor is a real estate agency (corporation). Several of the agents in the office have the opportunity to purchase shares of the corporation. One of the sales agents wants to purchase shares with his account in the 401(k) profit sharing plan (this sales agent is a non-owner and does not have an operational title).

Does this constitute a prohibited transaction?

Any thoughts would be greatly appreciated.

Thanks!

[mming]

If the plan is the type where each participant has control of how their account balance is invested, and stock in the corporation is one of the investments allowed, a participant may be able to accomplish this without a prohibited transaction occuring. I would recommend the particpant refer to the plan's Summary Plan Description to see if these conditions apply.

[austin3515]

I would recommend talking to an ERISA attorney before going anywhere near there. It is not nearly as straightforward as "adding a new investment option."

And the fiduciary liability goes up exponentially for the trustees.