old topic - limited partnerships as an investment

Strategy goes back to the 80s, recently took over a client with profit sharing plan, owner and employee are the only two participants.  Employee's funds are with a mutual fund only; portion of the owners funds are invested in a limited partnership.

I know an independent appraisal is needed, but would the whole partnership be part of the plan investment or just the ratio of the original investment to the total?

Prior TPA used the full value.

You mean somebody bought an interest in a LP, say 25% of the total LP, and it's been carried at 100% of the LP value?  Of course that is wrong.

I imagine it is simply poor communication marinated in stupidity.  Somebody buys something like that so you know they are stupid or at best had stupid advice, and the stupidity snowballs from there.

I was afraid of that; now to go back at least 10 years to redo.

6 hours ago, thepensionmaven said:

I was afraid of that; now to go back at least 10 years to redo.

 

While it's been wrong for awhile, has it really impacted anything that would require this? Have any distributions been wrong?

1 hour ago, Bill Presson said:

While it's been wrong for awhile, has it really impacted anything that would require this? Have any distributions been wrong?

I was kind of leaning this way.  Just show a big loss and allocate it currently.  Although I think if there were ongoing contributions it would not yield a "perfect"' result but probably close enough.

Thanks for the replies, it turns out the whole account is part of the principals account balance.