Can he take Real Estate as an In-Kind Distribution

[imchipbrown]

A client with a Profit-Sharing Plan has consistently kept a portion of the trust invested in real estate (usually raw land) and has done well buying and selling over the years. A few years back, the Plan purchased a 60% interest in a property as a Plan asset, and an individual (also a participant) purchased 40% personally, not as a plan asset. The land is roughly 1/3 of plan assets. The Trust is commingled.

The client is now at retirement age (though not ready to retire). His account is 95%+ of Plan assets. The plan allows in-service distributions. The Adoption Agreement doesn't now, but can provide for in-service distributions.

Is there any prohibition from him taking an in-kind distribution and making direct transfer to a self-directed IRA? Assume an independent third party appraisal or three are obtained.

[Guest Sieve]

Should be no problem if the propperty has a current valuation.

I wonder if the purchase of the property by the Plan and a participant in the plan might not have been a prohibited transaction. But I'm sure that bridge was properly crossed . . .