Are all purchases of plan assets by a party-in-interest prohibited tra

[John A]

An owner wants to buy a REIT held by the profit sharing plan of his company. Is this a prohibited transaction? Is there any way for him to own 100% of the REIT (his profit sharing source share of the REIT is currently over 50%)?

[David MacLennan]

It would clearly be a prohibited transaction for the owner to purchase the REIT from the plan.

Have you considered distributing the plan's interest in the REIT to the owner? If it is not publicly traded, the valuation principles of Rev Rul 59-60 apply, and often lead to a steep discount in the value applicable to the distribution. A valuation expert should be contacted to justify and document the valuation of the distribution.

Also, I believe there are some UBTI issues with REIT's in pension trusts, but I don't know this area very well.