One man plan investing in collectibles

[jkharvey]

One man plan with assets exceeding 250K, so 5500EZ is being filed. If the plan document does not allow for participant directed accounts, would investing in collecibles trigger distributions? For practical purposes this is the same as an individually directed account since the only individual participant is the trustee.

[Lou S.]

Why wouldn't trustee directed plans be allowed to invest in collectables?

Not saying that is the most prudent thing or that collectables are easy to value but I'm not sure why they would be prohibited.

[BG5150]

If the collectibles are more than 5% of the assets, I think he has to file an regular 5500, too. With proper bonding, of course!

[Lou S.]

If the collectibles are more than 5% of the assets, I think he has to file an regular 5500, too. With proper bonding, of course!

Why? I'm assuming it is a 1 man owner plan so no DOL issues.

[BG5150]

True. So, scratch my response. I had a client that WAS a 1-man plan, but he hired someone and that made us put the plan on the regular 5500 (because of non-qualifying assets).

[jkharvey]

My concern was since the Trustee of the Trustee directed plan is the only participant, it is essentially a participant directed plan and trustee directed. So, if the plan language provided for participant directed accounts, this exact same plan would not be able to invest incollectibles.

[Bird]

It may be "essentially" self-directed but it is still trustee-directed. Not a problem.