austin3515

Bumping up again with a follow-up... Executive gets $50,000 a year for 5 years, which becomes vested on 6/30/2022. Under the short-term deferral exception, I can have that paid say, 2/28/2023 and that is ok, correct? The distribution is taxed when received, in 2023?

It includes the rollover option. I'll probably end up just editing it to take out the rollover option.

K2retire I thought you solved all my problems - they have a spouse form and a non-spouse form but not an estate form. What a drag. This happens to be a pooled plan. I looked at some of the forms for the providers but not has a form specific to an estate. And therefore it's a challenge to sift there all the excruciating minutiae to find the language that applies...

Why do I continue?? Why?? I did the read the rule. The Participant came to the ROBS promoter seeking to use their rollover funds to start a business. The participant went to their website (presumably) or heard it from a friend who heard it from a friend. But somehow the participant found the ROBS promoter and I already decided to do this. I have a hard time believing ROBS promoters would have much luck cold-calling businesses that don't even exist yet. You say the ROBS promoter is recommending the rollover. What possible basis could have for making that suggestion?

If this was an anonymous post I'd still know who wrote it

In my case we have a TIN - but no one has a "death benefit" form they can share?

If the ROBS promoter is a fiduciary for providing compliance services to the ROBS sponsor, then you would have to agree that I am a fiduciary for facilitating setting up a 401k plan. But I am know that I am not a fiduciary. But now we're going around in circles (probably more than 50% my own fault :)) so I anticipate this being my last post on this topic.

There is no fee for investment advice here. That's my point

Ahhh these are the things I don't want to look up on my own!

Would anyone be willing to share a set of distribution paperwork for an estate, to be completed by the executor of the estate?

I agree that if the security selected, monitored and purchased by the PARTICIPANT makes money, then yes it is an investment. The more I think about it, I don't think the provider is making a recommendation. The client wants to start a business and the client wants to invest his retirement assets in the business through a ROBS. The ROBS person merely helps with the paperwok in a ministerial way. If they were receiving a commission for the amount of the sale, or charging a fee to advise regarding whether or not the investment was sound, or whether or not they should continue to hold it or sell it to another party, then ok maybe. But that is just not their role... They are not providing investment advice. Doesn't there have to be investment advice to be a fiduciary. Come to think of it, why wouldn't I be a fiduciary for designing a 401k plan? How am I any different? I am merely putting together legal documents to allow someone to establish a particular vehicle inside which to make an investment of their own choosing. Same exact thing the ROBS people are doing. My client might even roll an old balance into the Plan because I may have mentioned he might get better pricing. A fiduciary I am not.

So if I recommend to my friend to close his account to any old IRA am I a fiduciary? I am not getting paid in any way shape or form as a direct result of that rollover. Neither is a ROBS developer when the participant acts on their rollover decision. The ROBS developer is getting paid for compliance services - NOT investment services. I just cant understand how someone who is not making ANY investment recommendations could possibly be a fiduciary under these rules. I assume no one here thinks the ROBS design people are recommending the particular security being invested in??

Yes but they are not recommending a particular security in my opinion. The client is independently choosing the security. The ROBS people are recommending a vehicle. I just don't see it.

I don't understand this letter so I hope someone can tell me what I am missing. The new rules regarding amendmending safe harbors expressly allow you to amend for ANYTHING except the 4 expressly prohibited amendments. Why are they asking the IRS to approve certain other amendments when there is nothing prohibiting those amendments? http://www.asppa.org/Portals/2/PDFs/GAC/Comment Letter/final170606_Safe_Harbor_Mid_Year_CL.pdf

Even when the participant is the owner of the business? It makes me worry because they ask "was this a key employee" on the form and we have to provide the explanation of what happened. To me that says success is not a guarantee. The client doesn't mind paying the taxes in the prior year and I want the IRS to read it and say "well that sounds as fair as can be" and move on.

Well, you're coming close to suggesting that because I didn't go to law school I should handle pre-approved prototype documents, which at times requires quite a bit of skill and expertise even if I did not write the document for start to finish (frankly, neither do the attorneys--they almost always start with a template). Believe me I wouldn't touch a ROBS with a 10 foot pole, I'm just not sure it's that much further down the road I drive on every day...

In my case the missed RMD's were for owners so we are concerned that they are going to stick it to us. We don't have a great story for why it was missed, just a miscommunication between us and the CPA. We were thinking we could sweeten the pot on the VCP if they paid the taxes when due so even the Fed were in the same position they would have been otherwise...

They're not getting paid for investment advice in my opinion. They are getting paid for compliance services. I don't think it would make them a fiduciary any more than if an ERISA Attorney advised them regarding the transaction.

2016 RMD missed for an owner :(. ERISA counsel suggested reporting the income on 2016 1040. Do you guys think a code P on the 1099-R would do the trick? Not sure if it is 100% the right code, but man it seems like operationally the easiest thing to do...

Does anyone have a sense for what a normal number of days would be not for the blackout itself, but to be out of the market in cash. I know plans typically go into blackout before the liquidation date to ensure everything has a chance to settle, and on the other end it often stays in blackout until everything is completely up and running which at times is after the repurchase. I'm looking for a typical amount of time to be sitting in cash. Are there any statistics? I have some participants in a blackout complaining it was too long, and I don't have any way to evaluate whether or not this particular conversion was atypical or what. I should note that blackout did not extend beyond the window disclosed in the blackout notice. Obviously the market is either up or it is down in these things, and as "luck" would have it, the market was up in this particular time frame. I did not think it was appropriate or advisable for me to mention any specifics here so I won't.

Unless something drastic happened use the DFVC. The whole point of the program is for what you described, and that's why the fee is "so small" as compared to the $15,000 IRS cap. I wouldn't bother asking for abatement personally unless there were extenuating circumstances, like the plan admin was out on a medical leave as an example. I suppose you run the risk of aggravating them if you even ask.

I suppose you could really amplify this design if you were comfortable relying on Average Benfits testing to boot. The nondiscriminatory classification threshold being greatly reduced would allow you to keep out a greater percentage of the employees. Interesting...

Mr Bagwell, if you go back and look at my post you will nogte that I qualified it based on the fact that both plans pass coverage. So the hygienist plan has just NHCE's so that plan passes. Let's say there are 3 hygienists. And the dentist's plan has 1 HCE, and 4 receptionists, and 3 dental assistants. To me that is 7 out of 10 NHCE's benefitting in the Dr.'s plan which passes coverage. Is it a lot of extra work? Sure it is. Maybe it's not worth it. But it wasn't something I was going to propose to a client, just a hypothetical fact pattern to augment my understanding of the rules.

yeah I did not know that!

Thanks for the clarification Belgarath!