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This likely falls under what my partner calls the "Spandex Rule" - just because you can doesn't mean you should. A cash balance plan is no place for real estate, IMO, because of the volatility. On the one hand, you could lose a lot of money and have a huge underfunding problem. On the other hand, you could make a lot of money (which is what the owner usually hopes for) and end up with an excess asset problem. How happy would the owner be if he found out that his great real estate gain was going to be excise taxed 50% plus his normal rate of income tax. Put conservative investments in the cash balance plan and use another vehicle for the volatile investments. Ilene

If they amend to retroactively adopt the 4% safe harbor nonelective, then there is no ADP test, and therefore no refund and thus no late refund penalty.

Your query might lack some relevant information. Among other points: Did the participant die before, on, or after the participant’s required beginning date? Had a distribution begun? If a distribution began, did it begin before, on, or after the participant’s required beginning date?

A plan doesn't have to fully vest account balances upon Early retirement age (as opposed to NRA). Will there be a noticeable number of participants who might not be getting vesting credit each year? If you require 1000 hours a year for vesting credit, but everyone works that much anyway, then sure - anyone getting to the 5th anniversary of plan participation will have earned 3+ years of vesting credit. But if you have a good number of part-timers, you might have folks who don't typically vest in their match contributions - that would make the ERA definition more important, in terms of requiring years of participation to it. Typically in a DC plan I see the only "benefits" of naming an early retirement age are (a) possible waiver to allocation requirements for the year of termination, (b) possibly having in-service withdrawal ability tied to an ERA, or (c) getting less-than-65ers a faster track to 100% vesting. If terminees already can get distributions upon termination of employment, it's not as though the presence of an ERA speeds up their ability to receive benefits.

I had all my clients retain a real estate agent (someone reputable and not family related) and provide a formal appraisal, nothing like "well, I think it is worth so and so". It was all provided on official letterhead, FWIW. Sometimes nothing is good enough but this was better than nothing. When clients provided their own estimates, I did not accept it. They grumbled about the fees for an appraisal but at the end of the day, they understood that upon an audit, a formal appraisal was much more acceptable so they did it. The moral of the story, do not have RE in the plan (together with life insurance 😀)

Hi KayJay - yes, the successor plan rules apply if the employer terminates 403(b) and establishes a new 403(b). See 1.403(b)(10)(a)(1).

Because the credits are intended to encourage employers to establish new plans, they are not available if the employer has maintained a qualified plan, simplified employee pension or Simple IRA plan for substantially the same group of employees in any of the three taxable years immediately preceding the first year for which the credit is allowable. IRC §45E(c)(2) and (f)(4).

If one follows the Form 5500 Instructions for an authorized service provider’s signature, that signer is not responsible for the Form 5500 report; rather, one signs only five process statements about how the plan administrator’s signer authorized the service provider to submit the administrator’s report. If you do something else, consider that the signer states: Under penalties of perjury and other penalties set forth in the instructions, I declare that I have examined this return/report, including accompanying schedules, statements and attachments, as well as the electronic version of this return/report, and to the best of my knowledge and belief, it is true, correct, and complete.

You don't say how big (assets/participants) the plan is - at nearly $3M for just the RE component, maybe this is owner only or owner and spouse only, or maybe this is a smaller portion of a larger plan? If any non-owner participants then you have fiduciary prudent investment concerns. If owner-only, then likely very near 415 max and I'd be concerned about over funding. Agree with this wholeheartedly.