Is purchase of annuity by plan a prohibited transaction where particip

[chris]

My initial thought would be yes, but I didn't know if there was an exemption in the statutes or the regulations that someone was aware of. Please let me know your observations. Thanks.

[david rigby]

Not sure if the annuity purchase is relevant.

Generally, a qualified plan is intended to pay benefits after some severance of employment: retirement, termination, death, disability. The primary exception is attainment of Normal Retirement Age (defined term in the plan). If the EE is over NRA, then the plan can probably amended to commence benefits.

What kind of plan are we discussing? Might be possible to define NRA to accomplish your goal, but then that might create other problems.

[chris]

The plan is a profit sharing plan that is the result of a merger of a profit sharing plan and a money purchase pension plan which occurred in 1991. Almost all of the funds used to purchase the annuity were from the MPPP. The plan doc allows for in-service distributions; however, that provision would not be allowed with respect to the MPPP flavored assets.

The participant will be 70 1/2 towards the end of 2000. The annuity payments started in mid 1999. Possible to deem the payments as part of participant's required minimum distribution?