I understand that PURCHASING real estate from a lineal ascendent/descendent is a PT in my self-directed ROTH. My questions are :

May I purchase a piece of raw land with my contributions (not earnings), hold for the 5 yr. period, then sell it to my son or daughter? Or could I then sell it to an arms length party, who might then sell it back to me? Am I required to contribute the proceeds of the sale back intio the ROTH? Any chance I could sell it to myself?

Mike Preston said:

But there is one other issue to be aware of. If a new comp plan has any classes where individuals otherwise eligible for a contribution end up with none, then the IRS has stated, and I concur, that the net effect is that the plan can not use the Average Benefit Test. This means very little if the plan meets the 70% threshold. However, if it doesn't, then there will need to be additional NHCE's that benefit. This will happen most frequently when there are terminated NHCE's with hours in excess of 500.

Mike,

do you have a citation to back this up?

The Client had a Money Purchase plan for part of the year and had a funding obligation as a result. (And for those who will ask, Client's attorey failed to terminate the MP plan prior to start of Plan Year. There was no last day employment provision in the MP Plan.)

For the full year, Client has a cross-tested PS plan. Client fails the Ratio Percentage Test given an X% PS allocation.

When I perform the Average Benefits Test to see if the X% PS Allocation will pass, am I correct to include the MP allocation in this test?

Thanks.

Link to three-headed frog story:

http://www.local6.com/news/2900371/detail.html

Are the within 30 days and more than 30 days examples in the IRS regulations the only scenarios available in how to treat rehires or can an employer come up with their own set of rules as long as they apply to everyone? We have an employer who wants to require all rehires to resatisfy the plan eligibilty requirements unless they are terminated and subsequently reinstated through a grievance process, at which their benefits will be reinstated at the date of termination.

Thanks!

I have an unusual scenario and would like run this by for your expertise.

Plan A allowed for deferral and a match. The plan was frozen in 2002. In 2003 the employer adopted a multiple employer plan and participants began to contribute to the multiple employer plan. The assets from Plan A were merged into the multiple employer plan.

Plan A and the new multiple employer plan uses prior year testing (ugh). The employer does not want to switch to current year testing.

Is Plan A considered a successor plan for testing purposes? If yes, then the ADR and ACR would be 0%, which means the HCEs can only have 2% deferrals and 2% match. If Plan A is not considered a successor plan, I assume the adoption of the multiple employer plan is the “first plan year” and the ADP/ACP for NHCEs for the prior year is 3%.

Thanks!

We have a sole proprietor client with one employee that wants to increase the initial eligibility period in the 401k plan on the eve of the employee's satisfaction of the current eligibility period. Aside from being nasty, is there an anti-cutback problem? - or does eligibility not count as an accrued benefit?

We are the TPA of a plan that is a participant directed 401(k), but does not comply with 404©. The spouse of the only plan Trustee has been speaking with the plan's investment manager about adding a new fund option to the plan. We have been contacted by the manager who feels that the new fund is speculative, and would allow participants to try and short the market. He is also concerned about potential lawsuits.

We are trying to think if there is a reason for telling the client that this investment option is too risky to be in a 401(k) Plan. Are there any citations to the prudence requirement that we could use?

Thank you.

Union A merges with Union B. Union A ceases to exist and all Union A members are now Union B members. Union A has a pension fund. Union B has an annuity fund. Under the existing reciprocal agreements, if a former Union A member is working in Union B territory, Union B reciprocates to the former Union A member's pension fund and vice versa. In that the union employees are all members of the same union (i.e., Union B), the question has arisen as to whether or not the reciprocal agreements should be honored? It has been suggested that if the Union B members are working in the collectively bargained geographic location of former Union A's pension fund, then the Union A employers should contribute to pension fund instead of reciprocating to the annuity fund. And if former Union A members are working in the collectively bargained geographic location of Union B, then the Union B employers should contribute to the annuity fund on behalf of the former Union A members instead of reciprocating to the Union A members' pension fund.

Any thoughts?

We have a participant that rolled her IRA into a qualified 401(k) account. The investment company who held the IRA said that they do not code their IRA's as conduit and therefore use the premature distribution code 1 on all 1099R's. This obviously was not a premature distribution. Does anyone have advice on how to inform the IRS that it was not taken in cash and was not premature?? Thank You!

I'm wondering if anyone has developed a sample test to be used in connection with interviewing potential candidates for a plan drafting position.

If so, would you like to share it?

I have a 401(k) plan that needs a QNEC. The Adoption Agreement states that Forfeitures are to be used to reduce any Employer Contribution. Can the forfeiture be used towards the QNEC? Any reason why not? Thanks for any guidance on this.

Dad owns 75% in A, minor son owns 0% and outsider owns 25%. Minor son owns 75% in B, Dad owns 0% and different outsider owns 25%. With attribution, minor son owns 75% in A, and Dad owns 75% in B. Because a different third party owns the 25% in B, it would seem we do not meet the 80% test. But do we add 75% for both Minor and Dad (= 150%) to determine if 80% of interests owned by same 5 or fewer persons? It would seem not because we would be counting the same interest twice.

How do I code the specs in Relius to exclude service before age 18 for vesting? I can't seem to find it.

A 401(k) plan terminates by resolution on January 31, 2004. Are the compensation limits of $205,000 and the deferral limits of $13,000 for the full year prorated to just one month? Or, in other words, does a resolution to terminate the plan create a short limitation year? Section 1.415-2(b)(4) indicates that if you have an ongoing plan and changed limitation years, the limits would be prorated?

We have a self-insured medical plan. Currently we have an exclusion in the plan that states that if the injury/illness is due to a work related injury and can (or should be) paid through workers' comp that the health plan will not reimburse the expenses. The provision also excludes reimbursement for any injury incurred while receiving wages or profit.

We're trying to determine if this exclusion is standard, or, what other companies are doing with regard to work related injuries. The reason we're looking into this is because we have many employee spouses enrolled in our plan that are self-employed, i.e. farmers, plumbers, etc. Many of these folks, especially the farmers, are telling us that they cannot get coverage. We don't want to be bad guys but we don't want to be spending money unnecessarily. So we're trying to determine what is the most common practice in this area.

I am very new to government benefit plans. While I have a fair amount of experience with employee benefit plans, they are all ERISA plans in private industry. Obviously, this is not much help to me in my position with the government.

One of our state agencies would like to start a retention program for key executive employees. Initially the agency would purchase some financial instruments (likely a number of mutual funds). The plan would require the employee to meet certain goals set out by the agency. If the goals were met, the employee would be given the option to buy the financial interment anytime during the following 10 years. The purchase price for the mutual fund would be the fair market value price on the day of the initial offer, and that price would be held firm for 10 years, or until the employee elects to purchase the mutual fund. If the employee were to leave the employment of the agency within one year of purchasing the financial instruments, any gains realized would be repaid to the agency.

From a brief reading of the IRS website and a few federal regs, if appears that what they need is an unqualified plan under 457(f). Would you agree? If so, do you know of any guides regarding setting this up? (E.g. 457 Plans for Dummies). I am assuming that there are requirements similar to ERISA that would require a plan document, and possibly many other requirements. If I am off track in assuming this should be an unqualified plan under 457(f), could you set me on the right track?

Any information you could provide would be greatly appreciated.

After calculating the one to one correction (for late ACP refunds), the allocation for each eligible participant is less than $10 (some much less), and some don't even have accounts set up (they do not defer). Is there any de minimis ruling for such small corrections?

Suppose someone terminates employment in 2001. They were key in the year of termination due to ownership.

Are they considered key forever for top heavy testing purposes?

Any reg site?

I have a SIMPLE IRA accountholder who received a direct rollover from his employer's pension plan into his SIMPLE IRA. I haven't been able to find any guidance on how to correct non-SIMPLE IRA monies in a SIMPLE IRA. Should this be treated as an excess contribution? Should the SIMPLE IRA plan sponsor go through EPCRS? Any insight would be greatly appreciated. Thanks.