PLAN INVESTMENTS

[Gary]

say we have a non erisa 401k profit sharing plan where only a husband and wife participate.

say the plan is self directed non 404 c plan.

say each participant defers 16k for 2010 for a total of 32k in plan.

say they want to make an investment where they loan a non interested party 30k with say a 5 year terms with interest and principle, much like a plan loan to a participant.

Since it is a self directed plan i presume this could be accomplished if each participant agrees to loan 15k to the unrelated party.

If it were non self directed i presume plan could just write a 30k note.

is this a reasonable investment/transaction? I see no problem with it.

Thanks.

[K2retire]

Be careful about no related parties. We had a dentist who was loaning money to his patients from his plan. Since the loans corresponded to the amount they owed for dental services, the IRS was not amused.