Can a traditional IRA invest in real estate? If so, are there any penalties or special reporting requirements?

I've read the IRS publication and know about the prohibited transactions but I wasn't sure if the property could be purchased from a third party.

Thanks in advance for your responses.

Facts: A company sponsored ESOP was terminated late 2002 and payouts were made based upon an independent appraisal value as of the termination date.

The owner of the company now has a potential buyer. If the selling price of the company differs from the final appraisal for the ESOP distribution (which it will), what is the liability of the company to increase payout payments to the former ESOP shareholders, or, if the value is below, any reprecussions?

Thought would be appreciated.

Thanks,

Diane

Can anyone point me to any helpful resources on this topic?

I am aware of (1) an article titled Avoiding Difficulties When Unwinding an ESOP and Selling the Company in the September/October 1997 issue of the Journal of Taxation of Employee Benefits, (2) BenefitsLink's ESOP Q&A 11 (1999) and (3) certain discussions on this message board (including a number of helpful posts by RLL).

In the deal I'm working on, the company maintaining the ESOP will receive cash for its shares. The goal is to convert the ESOP to a profit-sharing plan and eliminate the right to stock distributions, while avoiding a termination.

The article referred to above suggests one approach would be to simply amend the ESOP to remove the right to take stock distributions. But it notes "Congress, the DOL and the IRS have all addressed and imposed conditions for an ESOP attempting this strategy." I'm aware of the 411(d)(6)© guidance that says such changes must be nondiscriminatory. Are there other "conditions" I ought to bear in mind?

Any other words of wisdom from those of you who may have dealt with this before?

I have a client for whom I prepared an ADP Test in January. The test failed and 5 of the HCE's took the required refunds to correct. The client just now provided us with new Census information and, while the test still fails, the HCE refunds are less than the original result. What can they do?

An employee brings in a doctor's statement requesting that the employee be released from work due to a medical condition. Can the employer contact the doctor to verify the request? Can the employer ask the doctor if the employee can work a reduced schedule versus being released from work completely (as the statement indicated)? The employer already knows the medical condition.

We are currently working with a sole proprietor who has a pension plan. He has a domestic employee, and would would like to offer a plan to that employee. If he sets up a separate plan, is this employee going to be considered part of a controlled group?

As a Health Plan broker I have a client in NYC currently self-insured and using a mediocre TPA I am looking for a recommendation from an emploiyer or from a TPA. The TPA needs to be HIPAA compliant and not using a clearinghouse and geared to customer service.

kova7.

I have a plan that we have been the TPA for several years. Company A aquired another dealership (call it B), and B's plan was closed, and the monies moved over into A's plan. I am trying to do the Schedule I, and I want to make sure I am logging this "merger" correctly. I need to put the amount that was transferred into A's plan from B's plan on line 2k. The monies from both plans show in the ending balance. There is no other place that I am supposed to log this merger in, correct? I have never been faced with this situation before, and don't want toget a letter from IRS/PWBA/DOL or whoever!

Thanks for your help!

PS: we were not the TPA for B's old plan, and the former r/k is doing their final 5500.

Client has a cafeteria plan with pre-tax medical insurance premiums and a health care/dependent care FSA. When you perform the annual non-discrimination tests, do you include the total cost of the health insurance (pre-tax employee share plus the amount paid by the Company) or only the amounts paid by the employees on a pre-tax basis. Of course, either way we will add in the FSA elections.

Thanks for your help.

As long as union employees are not considered "terminated", it is my impression that both scenarios are handled similarly. That is, they do not accrue service during the time they are either on strike or locked out by the employer.

Can anyone offer any war stories?

Are there any restrictions on what type of entity may be the dcument sponsor of a prototype defined contribution plan? I notice that most are sponsored by financial institutions - is that a requirement? Thanks for any assistance or cites you can send my way.

I've just started looking into investing in a ROTH IRA. One of the first questions asked is the name of the owner. What should I consider with regards to putting the IRA in my wife's name vs. my name? Thanks

Does anyone have a current state by state listing of which states allow cafeteria plans on a pre-tax basis and which states do not. One of my clients will be hiring shortly throughout the United States and wanted to know which states recognize the tax preference for contributions and FSAs.

My fax number is 856-778-3376.

Thank you very much.

Bob

The IRS rules are not clear as to how the owner of an IRA, who dies before RMD (70.5), can prevent his non-spouse beneficiaries (who cannot be trusted with money) from selecting a lump sum or any accelarated distribution.

A qualfied trust allows the beneficiaries of the trust to be considered beneficiaries of the IRA. But does the trust has the power to take away the option of the beneficiaries to select an accelarated distribution at any time. HELP

The IRS rules are not clear as to how the owner of an IRA who dies before 70, can make sure that his non-spouse beneficiaries do not use a lump sum or any accelerated distribution.

Using a qualified trust allows the beneficiaries of the trust to be considered beneficiaries of the IRA. But does the trust has the power to take away the option of a beneficiaries to select an accelared distribution at any time? HELP

Emoloyer sponsors a 401k plan. The plan provides match. It does not provide any other employer contribution. The plan covers all employees meeting the 21/1 requirements.

The employer wants to give more money to HCEs. Therefore, the employer wants set up a separate 401a plan, providing an employer contribution. The plan will only cover HCEs. He does not want to give the min. gateway to the NHCEs.

Is this doable? Under the minimum gateway rule, are all plans of the employer aggregated?

Even if there was not a min. gateway issue, I assume all plans are conbined for 401a4 testing?

Comments please.

Seller S sells its assets to buyer B1 in a 4204 transaction. In connection with the transaction, pursuant to ERISA Section 4204, S agrees to remain secondarily liable for a withdrawal by B1 during the 5 years following the closing of the transaction. On the first anniversary of the transaction, B1 sells its assets to B2 pursuant to a 4204 transaction. Pursuant to ERISA Section 4204, B1 agrees to remain secondarily liable for a withdrawal by B2 during the 5 years following the closing of the transaction.

Question: Does S remain "tertiarily" liable for a withdrawal by B2 during the four year period following the closing of the sale of B1s assets to B2? Any support for the answer?

PBGC Opinion letter 90-1 does not speak to this issue.

Thanks in advance.

Seller S sells its assets to buyer B1 in a 4204 transaction. In connection with the transaction, pursuant to ERISA Section 4204, S agrees to remain secondarily liable for a withdrawal by B1 during the 5 years following the closing of the transaction. On the first anniversary of the transaction, B1 sells its assets to B2 pursuant to a 4204 transaction. Pursuant to ERISA Section 4204, B1 agrees to remain secondarily liable for a withdrawal by B2 during the 5 years following the closing of the transaction.

Question: Does S remain "tertiarily" liable for a withdrawal by B2 during the four year period following the closing of the sale of B1s assets to B2? Any support for the answer?

PBGC Opinion letter 90-1 does not speak to this issue.

Thanks in advance.

Somone just told me that Dick Wickersham has retired. Is this true? If so, he will be missed at the various conferences and the IRS will surely miss his wealth of knowledge.

Can the plan sponsor of a 401(k) plan grant service credit to new employees for their service with their previous employer, on a new hire by new hire basis, even if the previous employers were not related to the employer sponsoring the plan, provided it is done in a manner that does not discriminate in favor of HCEs? If this cannot be done, please provide a cite showing that this cannot be done.

Thank you!