6.2.1.3 Prohibited Transactions
Under ERISA, certain types of investments and transactions are limited in qualified plans. These limitations help reduce the risk that employees will find themselves invested in an illiquid or overly speculative investment or owning something that is subject to a risk of physical loss through theft, fire, etc.
In an employer-sponsored retirement plan, the following investments are prohibited:
• Collectibles (antiques, art, collectibles, etc.)
• Alcoholic beverages, such as vintage wine
• Precious metals that do not meet certain requirements
Further, certain transactions are prohibited. A prohibited transaction is a transaction between a plan and a disqualified person that is prohibited by law. A disqualified person includes the investment adviser serving the plan, the management of the company offering the plan, and any company owning more than 50% of the company sponsoring the plan. Disqualified persons also include family members of the plan.
Prohibited transactions include:
• A transfer of plan income or assets to a disqualified person
• Lending money to a disqualified person
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