Leaderboard

Generally, no, that would not be allowable as it (deposit timing) would be a discriminatory BRF. Maybe 6% owner PS and 0% NHCE PS deposited throughout the year would be OK but as you say, there's no guarantee it would pass testing. If more NHCE PS is then required, would that create retroactive BRF discrimination? Maybe, probably would not know unless and until audited, if ever. Certainly going more than 6% is not a good idea. How important is getting that extra 6% in sooner compared to the possible risk? You can communicate the issues and, where there may be compliance ambiguity, the owner can decide how to proceed and accept any risk (but get it in writing). Another concern may be if PS provision has any conditions for entitlement in the document.

We have seen mistakes in this area before, so I raise this question just as a caution. The lack of a named beneficiary does not, by itself, default to the estate. Virtually every plan will include a "line of succession" to determine a beneficiary, the last of which is the estate. So ... has the plan definition of Beneficiary been reviewed?

Also understand if the estate is small enough in many states the beneficiaries of the estate can use a "small estate affidavit" I am NOT an expert and it isn't really the TPA's job to educate people on them. But we see them on a regular basis and it seems to allow a fair amount of skipping of the probate process. You now know close to 100% of what I know and I am not sure if I helped or not.

Why is the individual involving the plan in the purchase rather than buying the ranch entirely with personal (non-plan) funds? In these types of propositions I am concerned that the individual is using plan funds to serve personal (non-plan) interests, such as enabling the purchase when the participant does not have enough money outside the plan to cover the purchase price. That fits my understanding of a prohibited transaction. I also think it is a set-up for future PTs and other problems as the ranch is operated. Is the plan capable of covering its share of potentially unlimited demands for more capital? Qualified plans are not meant to operate businesses.