Plan investments

[Chippy]

A medical practice invested plan funds in a real estate investment partnership which owns the property that the practice utilizes for office space. Would this be allowed? I've been searching and I really can't find anything that says either way.

The property is not valued every year, it was valued last year for the first time in 16 years when one of the Drs. sold their shares. The plan owns 6.67% of the real estate investment partnership, it invested about $79,000 in the investment.

I'm leaning towards it is allowed, but feel it should be appraised every year. Agreed?

Thanks for you time.

[Lou S.]

Sounds like a prohibited transaction to me.

And yes an appraisal is required annually.

[Peter Gulia]

Is the plan ERISA-governed?

If so, did the plan's investment in the partnership result in, for any of the preceding plan accounting years, the plan's qualifying plan assets having been less than 95% of the plan assets?

If so, did the plan fiduciaries have ERISA fidelity-bond insurance with coverage no less than the value of the non-qualifying plan assets.

If neither set of conditions for a waiver of an independent qualified public accountant's examination was met, did the plan's administrator engage an IQPA?

If an IQPA was engaged, what did the IQPA's report say about the valuation of the plan's partnership interests?

If an IQPA was engaged, what did the IQPA's report say about related-party transactions and prohibited transactions?

Is the plan's partnership interest allocated only to the accounts of one or two directing participants, or is it allocated to all participants' accounts?