Prohibited transaction issue with DOL

[Guest borderline]

I have a situation where a Profit sharing plan invested in a partnership whose activity is investments and hedging much like a hedge fund. The plan has more than a 50% interest in this partnership but is a limited partner with no control or decision making functions. The other partner is the general partner ( friend and broker) who manages the investments. The DOL audited this plan and it's their opinion that this is a party in interest prohibited transaction, either because of the > 50% direct or indirect capital interest in the partnership or the 10% or more of direct or indirect capital partner interest of a party in interest. This has huge consequences because its investment in the partnership is 600K. My question is, since the plan is a limited partner and does not exercise any control of the partnership investments can the plan not be considered a party in interest and therefore not be considered a prohibited transaction. Cannot find anything that is on point with this fact pattern. Thanks for any help.

[QDROphile]

Could it be that (i) the DOL sees that the general partner as a fiduciary because the general partner is managing plan assets (see plan asset rules under ERISA reg. section 2510.3-101), and (ii) the fiduciary is using plan assets for personal benefit because of the fiduciary's personal stake in the partnership? What is preventing you from getting a direct explanation from the Departement of Labor about its assertions?

[Guest borderline]

The DOL has been sitting on this for more than a year and had yet to formalize its assertions in writing but said they will. Thanks for the ERISA section link.