Series 66: 5.2.1.3. Prohibited Transactions

Taken from our Series 66 Online Guide

5.2.1.3. 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

When a fiduciary uses plan assets or income for their own benefit

When a fiduciary is paid with plan assets or income for

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