Land Investment in Plan

Hello,

Have a solo 401k plan being set up.  Owner would like to take his contribution and invest in a land/property investment that his son is involved in.  I know this type of situation is a little tricky so any guidance would be greatly appreciated.  Thank you.

Search this board for the words "real estate" to get an idea of all the things that can go wrong with this idea.   Those problems alone should convince people to not do this.  

Now you are adding the son is involved with the land which could be a Prohibited Transaction- wow.  This sounds like a real stinker of an idea.  

Generally, decisions relating to plan investments must be made for the sole benefit of plan participants and beneficiaries.  Prohibited transactions are just one of many pitfalls of investing plan money in real estate.  The plan should work closely with an ERISA attorney if it decides to move forward with such investments.  If the plan is unwilling or unable to retain an ERISA attorney the plan should refrain from investments that can give rise to complex issues.  See this article for just some of the issues to consider:

REAL ESTATE AS A PLAN INVESTMENT - nl2-1.pdf

Thanks for the feedback.  I agree with a lot of risk with son's involvement.  Not worth it.