Handling of Illiquid Investments When Profit Sharing Plan is Amended to Self-Directed 401(k)

[Connor]

An Employer has a pooled PSP that holds, among other assets, raw real estate as well as trust deeds.  She would like to amend the plan to a self-directed 401k with brokerage accounts, however, she would like to keep the RE and trust deeds - is there any way to do this without having any kind of pooled arrangement?  Could she allocate these assets in the brokerage account to all the participants like a stock, or possibly allocate them all to herself if the plan never adds any more of these types of investments going forward?  

[Lou S.]

BRF

[Bird]

Unfortunately this raises questions about past practices, like whether full appraisals were done every year. Assuming yes, about which I have to be skeptical, then I think the only option would be to carve out these illiquid assets and leave them as pooled and the rest self-directed. If the owner keeps them you have a BRF issue as noted.

[Connor]

Thanks guys!