> For the complete documentation index, see [llms.txt](https://docs.repool.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.repool.com/fund-manager-essentials/about-investor-types/benefit-plan-investors/caution-3-erisa-traps.md).

# Caution: 3 ERISA "Traps"

Calculating the amount of ERISA-qualifying assets a fund holds might at face value seem like a simple proposition, but it can actually become quite complicated quickly (which is why many managers simply seek to avoid going near the 25% threshold to keep things straightforward).

Below are three major, potential complexities that a manager should be aware of:

* \#1 - Blending non-ERISA and ERISA BPI assets
* \#2 - Underlying BPI % of entity investors
* \#3 - Effects of redemptions/withdrawals on ERISA ratio

## More on Complexity #1: Blending non-ERISA and ERISA BPI assets

As previously described, some managers aim to take on BPI assets in a given fund, but only those which are non-ERISA-qualifying.  In theory, such a fund could take on well in excess of 25% of its assets from BPIs. 

However, there is a risk to such a fund that a manager must keenly watch - if it takes on *any* ERISA-qualifying BPI assets, then *all the non-ERISA BPI assets are suddenly counted towards the threshold.*

Let's put that in a clear example:

* One Ring Capital has $10,000,000, and 40% of its assets are from IRA plans.  While that's 40% BPI, it's all non-ERISA qualifying BPI assets, so the fund manager is in the clear.  Yay!
  * One Ring Capital accepts a new subscriber for a small amount, say, $250,000.  That $250,000 is from an ERISA plan.
  * That's just $250,000 of $10,250,000, or around 2%, right?  *Wrong.*
    * Because One Ring Capital has *any amount* of ERISA-qualifying assets, now all the other BPI assets are counted towards the threshold.  
  * One Ring Capital suddenly has $4,250,000 out of $10,250,000 (\~40%) as far as the 25% ERISA threshold calculation is concerned.  Uh oh...

Many managers are unaware of this reclassification of BPI assets and, as you can see, sometimes end up with a nasty surprise.

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