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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 11805
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If a group retirement plan dentist office wants to invest in

Customer Question

If a group retirement plan for a dentist office wants to invest in a private placement, are there eligibility requirements and is it required to fill out investor suitability form?
Submitted: 1 year ago.
Category: Finance
Expert:  Lane replied 1 year ago.

Hi,

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The issue here is the fiduciary duty of the trustee and administrators of the plan.

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As long as self-dealing and the other prohibited transactions are avoided ( personal use by associated persons, etc) and this is an arms length transaction then the trustee of the plan simply has to understand that he/she owes a fiduciary duty to the plan participants to make prudent investments.

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Most IRA custodians will not allow private placements so, you'll need to find a custodian (bank, brokerage, trust co., etc) that will allow this (and of course that has experience in this).

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The fiduciary duty aspect, (ESPECIALLY as it relates to GROUP plans) is why you'll see a good bit of advertising out there from custodians that handle IRAs and SOLO 401(k)s with private placements - but very few that will accept multiple participant plans.

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In IRA's and Solo plans the Department of Labor does not get involved, bit with group plans, you'll have ERISA guidelines to follow and the Dept of Labor looking over your shoulder.

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But yes, it's certainly doable, and gathering suitability information from participants that shows their understanding (and willingness to accept) the additional risk typically associated with private placements ALONG with documenting your own due diligence would be wise.

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Let me know what questions you have from here.

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Lane

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