Can an ESOP use the last independent appraisal for distributions to significant owners part way through next year?

S corporation needs to payout particiapant who is also a significant owner outside the plan. Stock held in particiapnt account in ESOP will be exchanged for cash within the ESOP to the extend liquidity allows. Remainder of stock will be acquired by the Employer through an ESOP loan. Do either of these transations require an interim valuation, or can the trustees rely on the last valuation as representing FMV - given no other significatn events have happened that would alter the value drastically.

I was thinking that we would need an interim valuation, but not finding anything on this.

Cites please!

Thanks.

Dawn

A client has found a commercial real estate parce to purchase. The property is a "Net Lease" with national credit tenant. The cost of the property is about $950,000. Can the client purchase a 50% interest in the property if the retirement plan purchases the other 50% interest???

If not, cna the client's mother or sister purchase 50% interest if the retirement plan purchases the other 50% interest??

Thanks.

Probably a stupid question but, what does CODA stand for as it relates to 401(k) plans or retirement plans?

PS plan set up for small business owner by investment firm that never drafts a document or adoption agreement for it. Unsuspecting client never had TPA as he was led to believe investment firm will do it all. Contributions were made annually and deducted. 5500's have never been filed. Accounting is apparently OK as the sole employee has always had proper amts allocated to him. Total plan assets are only about $50,000.

How can the plan now become qualified? Can the plan undergo voluntary compliance with the IRS w/o an FDL or an opinion letter? If so, how much of a sanction/fee would the IRS charge and how much would the client expect to pay a TPA to handle this (or would they need an atty.?)? Also, if this is done, would 5500's for all past years have to be submitted? What other options can be considered? All help appreciated.

This is an unusual one. Participant dies and has an outstanding loan balance. Account balance is moved to the beneficiary's own acount within the plan, but the loan does not move nor does it default from the participant's account at that time for some unknown reason.

Participant's estate is closed out and all tax filings are complete. Sponsor directs loan to default after the fact. Estate does not want to reopen estate tax filing, so beneficiary wants the records adjusted so that the loan defaults under his SSN and he wants to be responsible for the 1099 and taxation for the loan default.

I cannot find definitive guidance either way from my research. Any insight you might provide will be appreciated.

Andmik

We would like to change a funding method to unit credit from individual aggregate.

The situation seems to meet the requirements of Rev. Proc. 2000-40 for automatic approval.

However, I do have a question on the Four-Year Limitation on Changes.

Rev. Proc. 2000-40 does not allow automatic approval if:

"the funding method is being changed and a funding method change was made in any of the 4 preceding years."

The plan was initially effective in 2000. The funding method has not been changed in the first two years of the plan (2000 or 2001).

Does a plan have to be in existence for 4 years before an automatic approval can occur for this type of change?

Does anyone what a participant needs to do if they roll a loan into a qualified plan within the sixty day time period? I assume they have to fill out an IRS form indicating that the loan was rolled over since the prior recordkeeper is going to report the loan as a taxable distribution on a 1099-r. Thanks

Have a client with a separate ESOP & Profit Sharing Plan. The shareholders have elected 1042 treatment and receive no allocations in the ESOP. Can they receive an allocation in the profit sharing plan? The plan allocates using a salary proportional formula. The shareholders receive a greater contribution percentage than some of the participants because of the combined plan limits of 25% or $35,000. There are other participants who receive the same contribution percentage as the shareholders. The profit sharing plan wasn't set up to make up for lost contributions. The profit sharing plan has been in effect for years, the ESOP is new.

I thought that the shareholders could receive an allocation as long as it was not of the shares sold under 1042.

Thanks.

Does anyone have any thoughts on the extent that California's SB 168 will effect the administration of Multi-employer Plan's that are located outside of California, but have participating California Locals? The law doesn't seem at all clear. I would appreciate any thoughts.

If a qualified retirement plan that covers all employees is amended to exclude employees hired after a certain date (e.g. May 1, 2002), will the plan fail coverage when the 70% ratio percentage test is no longer be met, or is the average benefits percentage test available for coverage testing?

Opinions please.

One of our other offices has a client with a SARSEP plan. Since I don't take care of any of these plans myself, my knowledge of SARSEP rules is limited to what I read in various references, most notably benefitlink.com. I read Gary's sticky topic, but still am confused. Can someone please respond to the following?

Did the tech corrections act resolve the problem with an individual trying to defer 25%, (but the overall employer deduction is limited to 15%)? The 15% however, does not include the employee's deferral amounts.

Thanks. Maverick

First I want to thank many of you on this board, such as John G, Appleby and BPicker for such great advice. I have another question. My new ROTH's are with my American Express Financial Advisor, and their mutual fund family. I am pleased with my advisor, but seek your advise on AMEX mutual funds, as I am new to funds. They have Class A and B shares. "A" shares you pay a fee upon purchase, and "B" you pay when you sell. John G had mentioned no-loads with no fees. I thought all funds were either "A' or "B". Don't all funds require some kind of fee? Is American Express not offering the best in mutual funds? Any suggestions?

To users of Relius WEB:

Are there any problems with Relius WEB that I should be aware of?

Thank You

I have an employer who maintained a Simple 401(k) and then converted to a "regular" 401(k) effective 1/1/01. For 5500 purposes, do we have to file a final 5500 for the Simple 401(k) and reflect the assets transferring from the Simple 401(k) (plan number 001) to the "regular 401(k) (plan number 002) or can this be treated as one plan (001) and simply reflect the new plan name as a "regular" 401(k) on the Form 5500?

The new SPD rules require plans to include a summary of fees on a participant's individual account the payment of which is a condition to the receipt of benefits

I assume this means stuff like loan setup & maintanance fees, hardship withdrawal fees, in-service distribution fees, etc...

We were charging a quarterly recordkeeping fee that is being waived this year by our provider, I assume this is not included in the SPD nor investment related fees, correct?

In a recent call with an insurance representative, reference was made to the Office of Health Care Information (OHCI), which apparently operates at the federal and state level. Although I am aware that not every state has mandated public reporting, I am hoping to get OHCI data (a hopefully unbiased source) regarding some hospitals in North Carolina and other states pertaining to average charges reported. Some of these hospitals allegedly charge much higher rates for similar services than other area hospitals. I've tried searching the Government sites but so far have come up empty handed. Any suggestions where I might find this type of information? Any cautions/understandings we should have when looking at this type of data? Any help appreciated!

Hey everyone, I just stumbled upon this site and think it is great! I am new to any kind of investing, so please forgive me if I sound too raw! This might not even be the right forum for me to belong to, but I thought I should start somewhere. Basically, I have a 401k at work which I put 10% into every paycheck. I want to start a ROTH IRA, but have the slightest idea what one is or how to do so. I'm not interested in having anyone trolling for my business, I just was wondering who the whole process works and what do I have to do to start one up. Any suggestions or recomendations are appreciated. Thanks!

What is a Mini 401(k) or Uni 401(k)? And where can I find more information on this?

I'm a TPA that services 3 plans that are PEOs (Professional Employer Organizations).

I have in the past filed this plans as single employer plans. One in particular has no eligibility, immediate entry, age 18 is only limit. The HCEs are tremendously limited (they can ususally only defer around 1% as participation is poor).

If I reading this Rev Proc right, the bottom line is that this plan, and all PEO Single Employer plans have to be terminated or converted to Multiple Employer plans. Does everyone concur?

I know that congress tried to pass legislation on PEOs last year but it didn't go through so the IRS jumped in with this Rev Proc but is everyone jumping on this bandwagon or should we wait for congress to pass a bill superceeding this?

Comments are welcome and appreciated. This is a very good link for info

http://employerbook.hypermart.net/index.html

What is the contribution limits to a SAR-SEP? Is this correct?

EE - 100% up to $11k

EE - $1k catch up

ER - 25%

Total EE & ER - $40k