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All of the automatic contribution arrangements that I've seen default the participant into pre-tax deferrals.

Thank you for your response! To answer your questions: First, I am an FA but I am not a Registered Rep. I am an independent Investment Advisor Rep (IAR-RIA) with no B/D affiliation, very distinct from a RR, and thus only Frost model compensation here (no rev share/commissions). Second, typically I act as a 3(21)(A)(ii) IA fiduciary and as an SEC (but not ERISA) fiduciary to plans for the purpose of many services outside the scope of investment advise or management. And in a few cases our firm acts as a 3(38) IM. So I don't have any issues with my compliance dept per se because I have ample experience in the same capacity. For this plan, I have no interest in advising in the capacity of an erisa fiduciary on the real estate investments, not because I can't but because it's outside the scope of my expertise. My services to the clients will include business and estate planning (on a personal level), but services related to the plan will be limited to a scope of services similar to other contracts with existing plan clients (vendor and professional aggregation/search and monitoring assistance, oversight, compliance assistance, etc), but nothing that would otherwise qualify me as an erisa fiduciary with respect to administration, management or control of assets, or investment advice or management. With respect to hiring the actuary, that is part of the conversations I am having this week with other local colleagues. And your questions about cash required to pay expenses, distributions, etc. are all valid, which I am very much aware of and are part of my reasoning why I am unsure whether this is a good idea to begin with. It will certainly require an individually designed plan, and since the IRS has changed the determination letter rules it makes the consideration of an individually designed plan and the subsequent IRS view on tax qualification all the more important. Your question about the "end game" I found insightful because I need to investigate that more fully. I know the "older" owners want to fund it for about ten years before retiring, but I'm sure they don't fully realize how the income will be generated, and as a matter of fact I had not even begun to consider that, but an excellent point in any event. Thank you for your advice!

Just looking at the basics what will be your role in this plan? As a FA you are registered rep which means you can buy/sell securities. RE is not a security. Are you going to be the named or de facto fiduciary. Will your compliance dept approve such a role? If this going to be a cash balance plan the plan sponsor must hire an enrolled actuary who will design the plan benefit formula and determine what the funding requirements will be. In a Cash balance employer must make annual contributions necessary to meet the minimum funding requirements under the tax law. I have no knowledge of what would be the funding requirements but I think the first step is to hire an enrolled actuary assuming you can find one who would accept an assignment to represent a plan funded solely in RE. If the plan is invested only in RE where will it get the cash needed to pay expenses, distributions, etc? RE is not a diversified investment like an index fund so there will be limitations on what % of plan assets can be invested in RE. Another question is what is the exit strategy for the owners? Are they intending to fund the plan for a short period with RE, say 5-10 years, retire, terminate the plan and distribute the benefits. If the FMV of the RE is not sufficient to pay benefits and costs of termination will they contribute more funds? I am going to stop here because I think establishing a retirement plan solely invested in RE is a really bad idea that I would not want to be associated with.

To me an annual match strongly suggests that the matching rate be set for the full year.

GBurns: Short answer: You are discussing matters governed by the IRS under the tax laws. EBSA does not regulate or have any oversight over IRC provisions regulating qualified plans. EBSA inquiry is focused on whether employee has a vested benefit in the plan under ERISA TITLE I. If the answer is yes then the benefit must be paid. If you think about it, allowing plans to deny benefits to employees whose benefits are documented in plan records but which are not confirmed by employment records would be an invitation to deny benefits to all participants where the records of employment are routinely destroyed as part of the employer's document retention policy. It could also be construed as a violation of Section 510 of ERISA.

Well when you put it like that I almost feel guilty for asking I have a feeling she's not going to tell me his name. And yes I realize that giving a link to the article would have been the same thing (hence the guilt)... I actually tried googling it but found nothing. I actually think this would be a good article from one of those law-firms. The expression "oh, let's put your spouse on the payroll" is something that I have heard many times before. I always clarify when I hear it by saying, "No, let's find a job for Spouse to do for which we can compensate them." I think if I could say "here's an example of a guy who was convicted in court for doing this" my warnings would have more bite!

You may be right! I'm in an uncharacteristically benevolent mood right now, so my cynical side (which normally has the upper hand) is temporarily repressed. As to the south Florida land, I think I already bought that - according to my deed, I apparently own all the land upon which Walt Disney World is built. With that and my stock in "I admire Congress" Buttons Manufacturing Corporation, I can retire in style...

Required? By whom? For what purpose? In the past, restated documents were to make it easier on IRS reviewers. Seriously, your desire for a clean document is great, but I foresee that problem getting worse. And more abuse. And more outright discrimination. Since a DL is never required, those who want to abuse will be (essentially) given a green light to proceed.

I rarely disagree by name but I disagree with Jpod on this one. Josh I agree you have every right to protect your interests. As such you should ask all the quesitons you need to determine you really were overpaid or not. But if you owe the plan money you should pay it. This is simply good ethics. I have been on both sides of this. I have made mistakes that have caused participants to be overpaid and underpaid. If I find a person is underpaid I work to get them paid. The reality is I could many times let ignorance be bliss tell no one I made a mistake and no one would know there was a mistake and an underpayment happened. I don't let it happen. I have made mistakes where a person was overpaid and was relieved when they agreed to repay the money that was a mistake. And yes you shouldn't have to pay taxes if the IRA returns the money to the plan via a trustee to trustee transfer.