investment in rental propert

[thepensionmaven]

One of our clients wants to invest part of his pension in some property owned by his brother. This purely an investment, no party-in-interest transactions as no one in either family will reside there. Purely rental property.

Plan allows for individual accounts, so this is a permissible plan investment. All income will be placed in a trusted checking account, from which expenses will be debited and the rent will be credited.

Question is, how does he set this up? Obviously the property must be owned by the plan.

What kind of paperwork is involved? A standard type of loan agreement, but modified for investments?

[QDROphile]

"no party-in-interest transactions as no one in either family will reside there"

There is more to the prohibited transaction rules than that. Any time a family member is involved in the transaction, the analysis is clouded and Departmnet of Labor opinions only proide warnings rather than resolution. All of the elements of the transaction have to be evaluated, including the financing that is casually mentioned. Also, institutional trustees often have requirements or restrictions relating to the acquisition of real property. Nothing has been indicated about property management

If the investment is just too good to pass up, some serious experienced help is warranted.

This is not the sort of thing that a qualified plan is supposed to do; careful navigation is required.