Investing in LP & Venture Capital Funds, It this allowed???

[Guest AJ Milano]

I am inquiring if a 401(k) plan is allowed to invest in a Limited Partnership and / or a Venture Capital Fund. If allowed, I would appreciate if you can tell me the section of the code where I can find this information. Any help is greatly appreciated. Sincerely, A Milano

[IRC401]

The investment is permitted, BUT you need to figure out:

- How assets will be valued and reported on the 5500 (and if there will be audit issues)

- If there will be UBTI

- How to deal with 401(a)(9) issues with an illiquid asset.

- Whether there are any SEC issues

- Whether there are any document issues (Will your prototype permit mandatory in-kind distributions of an illiquid invesment?)

NOTE: Assuming that the venture capital fund is designed to produce LTGC, why would someone want to make the investment through a 401(k) plan and turn all of the income into ordinary income?