What Are Plan Assets? A Comprehensive Legal Overview

Q: How is the 25 percent threshold calculated?

The threshold is based on the total value of each class of equity interest held by benefit plan investors after an acquisition.

Q: Can an entity&#039;s assets be considered plan assets if they are below the threshold?

No, assets are not considered plan assets if less than 25 percent is held by benefit plan investors.

Definition & Meaning

The term "plan assets" refers to the assets of an employee benefit plan as defined by regulations set forth by the Secretary of Labor. Specifically, assets held by an entity are not considered plan assets if, after acquiring any equity interest in that entity, less than 25 percent of the total value of each class of equity interest is owned by benefit plan investors. This definition is crucial for determining the extent to which an entity's assets are subject to regulations governing employee benefit plans.

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Legal Use & context

In legal practice, "plan assets" is primarily used in the context of employee benefit plans, particularly those governed by the Employee Retirement Income Security Act (ERISA). Understanding what constitutes plan assets is essential for compliance with ERISA regulations, which protect employee benefit rights. This term is relevant in various legal areas, including labor law and corporate law, and may involve forms or procedures that users can manage with the help of legal templates available through platforms like US Legal Forms.

Key legal elements

Real-world examples

Here are a couple of examples of abatement:

Example 1: A pension fund invests in a private equity firm. If, after the investment, the pension fund holds 30 percent of the equity interests in that firm, those assets would be classified as plan assets.

Example 2: A benefit plan invests in a real estate investment trust (REIT). If less than 25 percent of the REIT's equity is owned by benefit plan investors, the assets of the REIT are not considered plan assets. (hypothetical example)

Relevant laws & statutes

The primary statute governing plan assets is the Employee Retirement Income Security Act (ERISA), specifically under 29 USCS § 1002. Additionally, section 4975 of the Internal Revenue Code applies to certain employee benefit plans, impacting how plan assets are defined and regulated.

Comparison with related terms

Term	Definition	Key Differences
Plan Assets	Assets held by employee benefit plans as defined by ERISA.	Focuses on the ownership structure and investment thresholds.
Trust Assets	Assets held in a trust for beneficiaries.	Trust assets are governed by trust law, not specifically by ERISA.

Common misunderstandings

What to do if this term applies to you

If you are involved with an employee benefit plan and need to determine whether certain assets are classified as plan assets, consider consulting a legal professional for guidance. You can also explore ready-to-use legal form templates on US Legal Forms to help manage your documentation and compliance needs effectively.

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Quick facts

Jurisdiction: Federal (ERISA)
Key Statute: 29 USCS § 1002
Threshold: 25 percent ownership by benefit plan investors

Key takeaways

Frequently asked questions

What are plan assets?

Plan assets are the assets of an employee benefit plan as defined by ERISA regulations.