Test an acquisition of employer securities or employer real property against the statutory limit
Key facts
- Human involvement
- YellowClose supervision
- How AI is used
- From the acquisition papers and the asset list, record the security or real property being acquired, whether the plan calls it an employer security or employer real property, the fair market values used, and whether the plan document describes the plan as an eligible individual account plan. Do not decide that the acquisition is inside the limit.
- What the lawyer must review
- The lawyer decides whether 29 USC 1107 allows the acquisition. Subsection (a)(1) bars a plan from acquiring or holding an employer security that is not a qualifying employer security, or employer real property that is not qualifying employer real property. Subsection (a)(2) bars an acquisition of a qualifying employer security or qualifying employer real property if, immediately afterwards, the aggregate fair market value of employer securities and employer real property held by the plan exceeds 10 percent of the fair market value of the plan's assets. Subsection (b)(1) says subsection (a) does not apply to an acquisition or holding of qualifying employer securities or qualifying employer real property by an eligible individual account plan. The lawyer reads the rest of subsection (b), including the rule that can treat required investment of applicable elective deferrals as a separate plan that is not an eligible individual account plan, before treating a 401(k) or profit-sharing plan as outside the limit. The regulation, 29 CFR 2550.407a-2, states the 10 percent test by reference to qualifying employer securities and qualifying employer real property, defines what counts as an acquisition, and reduces total plan assets for stated acquisition indebtedness. The regulation's examples are illustrations, not this plan's figures. This is not a 5 percent in-house asset test.
- Written for / version
- United States versionUS
Who does what
| Role | What they do |
|---|---|
| Assistance | Consider narrowly defined preparation support after confirming the tool’s capability and permitted scope. |
| Lawyer | Set the scope, supervise the work closely, verify every part relied on, resolve omissions and exceptions, and approve the exact output. |
Checklist
- Trace every relied-on figure to its source, confirm dates and assumptions, and independently recalculate totals or derived amounts.
- Verify the applicable jurisdiction and the version of each relevant law, rule or instrument in force at the material time.
- Confirm the output against the client’s instructions and the complete relevant source material, including omissions or contradictions.
- Resolve exceptions and record the responsible lawyer’s approval of the exact output and intended use.