Commingling DB & Participant Directed DC Assets

[Dennis Povloski]

I have a Profit Sharing Plan where each individual participant has an annuity contract , and each participant self direct the subaccounts within their annuity.

The owner is contemplating adopting a defined benefit plan for his business, and he would like to dump the DB contributions into the annuity for his benefit in the profit sharing plan.

I believe that it is possible to commingle DB and DC assets, as long as the recordkeeping is clear (contributions, expenses, earnings, etc can be properly allocated to the correct plan). But this just sounds wrong to me.

Is it at least a prohibited transaction? Self dealing, perhaps? If having by larger asset base in the annuity, the owner could have some kind of unfair advantage over the employees?

Anyone care to share their thoughts?

[david rigby]

Let me guess: the insurance agent recommended this!

[Dennis Povloski]

He thought it was a great idea!