austin3515

Oh you can spin it any way you want, but you see my point. A dollar in your account is a dollar in your account. If there was hair brained public policy agenda to ban forfeitures from being used to offset ANY employer contributions, then sure everyone gets more money and the economists are happy happy happy. But that's not what's going on here. What's going on here is a silly nuanced ultra-literal interpretation of a vaguely worded reg and nothing more. It's a wholly manufactured burden on businesses (in particular small ones).

The employee for starters. Economists for another.

Shame on you Bird! This is the dumbest position I've ever heard of! It's a classic example of a solution in search of a problem that just did not exist. The employees get the safe harbor contribution. That's the only thing that matters.

Bird, I think the gray area is that compensation must be reasonable. And the presumption might be that it is unreasonable based on the close relationship, with the fiduciary being obligated to prove it is reasonable. I think that is the issue most of us have. And as others have stated, how do you prove something is reasonable when that standard is by definition subjective.

To be clear, I think it is inadvisable. My point above is that one is a gray area (the brother) and the other is explicitly forbidden (the son). For whatever reason, neither a girlfriend nor a brother are considered a party-in-interest, so at least no one can point to a law and say, "Look here, you broke this law."

The difference between son and brother is the difference between son and complete stranger. So the example is not really spot-on because the son is within the definition of party-in-interest. The brother is not.

I'm inclined to agree with all that. I will caution the client accordingly... I think the DOL would be over this like a fly on you know what.

ok, that works for me. other expenses it is. That;s where we've put it historically. You just hate to increase those expense lines so when the marketers they call they say "you're paying HOW much in expenses??"

What I am surprised by is that there is not some clear guidance on this. I know it's only 1% of plans, but it seems like it should come up often enough that there would be some written guidance over the past 40 years!

So which line would you include it on? Appreciation/depreciation?

Where on Schedule H would these expenses be included? They include an appraisal and maintenance/landscaping. Nothing in the Plan seems spot-on. It doesn't seem to fit into the description "appreciation/depreciation" but doesn't really feel like an expense either. As a pre-emptive disclosure, this is in the context of a large pooled plan, and real estate makes up less than 5% of plan assets. And its being leased to an unrelated tenant.

The UBTI applies to any leveraged investment, doesn't it? Otherwise, you could invest in real estate with after-tax dollars (the lenders after-tax dollars) and have all of the income tax sheltered (net of the interest expense anyway). Isn't the point of the UBTI rules to prevent this?

I didn't see any reference at all to the PT rules in 408b2 (aside from not providing the disclosure)? J Simmons, can you please explain?

That doesn't make a lot of sense to me - I thought that was a huge no-no. The presumption is ALWAYS that it is not appropriate. The whole point of doing that is that so that the DOL wouldn;'t have to sit there and decide if it was reasonable.

I agree, I got off my you know what and looked it up and found that sibling is not on the list. But I also agree (and what I said to the client) is that upon audit there would be some pretty serious scrutiny of this appointment.

Can the brother of an owner be the paid investment advisor for the plan? (i.e., paid from plan assets).

http://www.irs.gov/pub/irs-tege/epn_2014_18.pdf IRS newsletter clarified that the SUP is only for people not already required to file electronically. The compliance questions will be added to the 5500-SF. So at least we are not going to be required to file two separate forms. PS, the 250 threshold counts each w-2/1099 as a separate return.

There are new opportunities for rolling after-tax balances to Roth IRAs that did not exist last year (as discussed above) in some of the links.

Definitely a blunder...

The allocation should be based on account balances? Disclosing this could never be a problem. It might not be mandatory depending on what your fee disclosure says. In essence, these are fees that are not being assessed though so the disclosures should be optional.

Go with in-plan roth conversions in that scenario. I see no purpose for it in a qualified plan at all. No one in their right mind should be doing after-tax unless they max out on Roth. And why add after-tax if you're not already allowing Roth. So maybe it's a good idea if you have an NHCE base that is maxing out their roth who want some additional opportunities, But exclude the HCE's from the opportunity. Never say never, but I guess that's the only scenario I can think of. And to Tom's interesting point, only then if the plan is not top-heavy,.

"If it's a 2/28 plan year end, you can amend now to be effective 3/1/2015." But not if it is a 12/31 year-end, correct? That was my conclusion as well, but wanted to see what others thought as well.

Is it possible to add mid-year? What if we amend today have it effective 3/1/2015?

I hate good points with a passion sometimes.

Follow up question. At what point do we need to inform participants about this other opportunity to have the self directed brokerage account? Assume RIA's minimum account threshold is $500,000. Can I limit disclosure of the arrangement to participants who have $500,000?