plan investment

[Guest nipa1]

A participant directed 401k Profit Sharing Plan's key employee (owner/menmeber s-corp) has bought an antique car under the name of the plan as one of his investments. I believe this falls under the prohibited transaction umbrella but would like to hear other opinions/thoughts.

Thanks!

[mming]

Most likely it does - a discrimination issue at the very least. Generally in such a plan, every participant should have the same opportunity to invest in every investment available in the plan - I couldn't see this happening with the car, or there being similar cars offered to the rest of the participants. BTW, the car shouldn't be used for personal reasons if it's owned by the plan, i.e., it shouldn't be driven or displayed, only stored, and, of course, be professionally appraised on a regular basis.