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Might the "rollovers as business start-up" discussion be useful? http://www.irs.gov/Retirement-Plans/Employee-Plans-Compliance-Unit-(EPCU)-Completed-Projects-Project-with-Summary-Reports-–-Rollovers-as-Business-Start-Ups-(ROBS)

I am making the assumption that his equity interest will be only the equity interest held in the IRA or DBP (i.e., not up to 10% held personally and then some more in the IRA or DBP). Will he be compensated for his service as an Advisory Board member? Is he a lender to the company (or involved with or related to any entity that is a lender)? Does he have any other connections to the company (e.g., such as a relative involved with the company)? If all the answers to these questions are "no" I don't see any PT issues. Too many facts necessary to comment on UBIT, but if it's a great growth-oriented investment it's probably still a great growth-oriented investment even if some UBIT is thrown off along the way.

Although do check the document. I can't remember the last time I saw a document that doesn't cover rehires in almost every situation. I say this because so for this conversation is talked about the legal rules. I have seen plan documents that pretty much say "once a participant always a participant" and the person enters upon rehire basically always. You can write a document to allow for more generous rehire entry provisions then the law requires and like I said I have seen it.

But there are other rules that govern fiduciary conduct.

This topic has generated more fertilizer than any other topic in my 25 years in this business. The premise of the linked article, other similar articles, ASPPA comment letters and comments from some ASPPA speakers is that the IRS has been consistently saying at conferences that absolutely no mid-year amendments are allowed to safe harbor plans except for published exceptions. I've ranted on this before and no one has provided an example of a conference where an IRS speaker actually said this. I have seen several articles and heard several speakers claim that it was said by the IRS at the 2011 annual conference. The session recording proves that claim is false. Now SunGard claims the IRS has been taking this position since 1999. http://www.relius.net/News/TechnicalUpdates.aspx?ID=1004 Having attended the ASPPA annual conferences for 2001-2004 and 2006 to date, if the IRS had actually been making this kind of statement, I would have witnessed it. If this really was the IRS position back to 1999, the final regulations published in 2004 would have reflected it. One of the authors of the final 401(k)/401(m) regulations was a speaker for a couple of sessions at the 2006 ASPPA annual conference, including the DC Q&A session. Having attended her sessions and after speaking with her between sessions, I have no doubt that if that were truly the IRS postion, the final regulations would clearly prohibit all amendments. The regs clearly do not say that. I also find it strange that SunGard is claiming the IRS standard since 1999 has been to prohibit any amendment that would change the SH notice, yet ASPPA GAC sent the IRS a letter last year asking the IRS to impose that as the standard for mid-year amendments.

austin3515, I share your frustration about some weaknesses of a sometimes inconsiderate law-maker. You’re a highly capable practitioner. And business owners go to you because you give better advice than the well-intentioned but less smart person who has the customer-service job at the investment house. So yes, if a document you send involves a risk, you warn your client about the potential consequences – at least those that you know about. (Even if you’re not worried about liability or other blame, you explain the consequences because it’s the right thing to do.) And you try to set your fees so that your client is paying for the time it takes to give accurate, complete, and thoughtfully considered advice. Or if you choose to set your fees to meet a market, be honest with yourself about the business choices you make. If it helps to vent about a point that the IRS could manage better, go for it! (You taught me something today.) But a government agency (whether it’s the IRS, EBSA, SEC, or another) isn’t likely to live up to our ideas any time soon. In the meantime, we keep giving good advice, and we let a client make its choices.