GBurns

Premiums are collected by the VEBA and paid to the insurance company plus you also stated that this medical plan is fully insured, So what claims does the TPA adjudicate ?

Contract between which parties? Which contract ? The salary reduction is between employer and employee. As far as I know, barring a court order, usually only parties to a contract have standing.

Since the plan is not the employer, and the payroll (and deduction/reduction agreements) is between employee and employer, How can the plan and/or its fiduciary exercise any control over stopping payroll deductions ?

No, you don't "got it", but let us leave it at that. Good luck.

This is not my area of expertise but some thoughts have occurred to me. The participants have receiived an impermissible distribution, hence a failure to in plan operation. The participants have failed to pay, a violation of plan terms. Aside from vebaguru's point about lack of documentation being a disqualifying event, aren't the above also disqualifying events ? Then there is the issue of reporting the transfers as income/value received/paid to the participants. I wonder why the cooncern is not about the IRS issues of plan disqualification, and underreporting/misreporting of income ? These will certainly be more than $3,000.

A problem with the small employers seem to stem from less or limited exposure and/or training. As a result most that I ran across did not have any way of determining what was aggressive or illegal. As for advisors, the small employer usually has no way to evaluate the merits of the advisors. tschotland in the other threads makes a fine example, except that he made the very unusual step of questioning his advisors by seeking other input. This is, in my experience, very unusual for a small employer to have done.

Don Any income that is taxable income is subject to tax. Whether actual tax is owed depends on deductions, exemptions, offsets etc etc. That is the nature of tax liability calculation. It does not matter whether individual corporate, VEBA etc etc. Aside from that your post seems self explanatory in its self-contradiction, and I wonder if and moreso how vebaguru will phrase a response. "self-contradiction" might be a poor choice of words to describe confusion, but i could not think of anything else.

I doubt that there is a gentle way. Your post reminded me of why I stopped doing business with small employers. They want to do things their way, regardless of what any law or legal document states (assuming you can even get them to read it) and then you are faced with the fact that the company is not large enough for there to be any senior executive etc who might be able to give some advice to the owner. This is not to say that I have not seen similar bull headedness among senior executives of large companies but aside from the possibility of going around or above them (even directly to the Board), at least the greater money offsets the aggravation.

You have me puzzled. What is the similarity that you see between leveraged trading of any sort and the financing of a real estate purchase ?

I doubt that there is a right or wrong answer since there is probably very little difference beyond source of contributions. For me, the answer depends on control and accessibility. The 401(a) might only be earning a higher rate now because of the investment choices made. Past performance is no indicator of future performance. So other features should be considered.

Let me see if I understand. You want to continue to fund an HSA for the next few years until you are eligible for Medicare. That is roughly 3 years. You understand that you also need an HDHP. Have you found one that suits your medical coverage needs and which in combo with the HSA suits you better than whatever else is available ? You understand that whatever is not used for qualfied medical expenses will be subject to taxation and penalties if used. Have you estimated how much more this would be when you become Medicare eligible ? You are willing to give up your investment potential in order to do this. Bear in mind that we do not know whether the investment would appreciate or decline, in the future, if left alone. So we do not know what is really being given up. You have actually simulated a tax return using this scenario and seen what the actual tax benefit will be, rather than guessing.

Many things in the tax world have broad meanings. You are being too narrow with "plan income and assets". The guaranty relates to, affects and is affected by the plan assets. If that was not so, there would be nothiing to use the guaranty for. Consider what the term "tax return" means. To some it means 1040 and 1120 etc only. To me, and the IRS it also means 941, W2C etc etc etc. Every nit-picking attempt that I have ever seen has failed when challenged or was not worth the effort to defend. Then there are the ever present issues of substance over form and economic substance. Weigh the pros and cons, make your decision, then pray. Good Luck.

Usually participation ends on termination unless otherwise specified and as allowed/dictated by the Plan Document. Then there is the COBRA aspect. If the expenses were incurred during the period of coverage, then there is no legal way to get the money back. Just the nature of the beast.

If you sign the guaranty that should immediately be the point of the creation of a PT. Why in heavens name do you think that the custodian could give you anything that would undo the PT ? Are you considering that somehow the custodian has the power to override regulations and decide for the DoL and IRS what their enforcement should be ? That is even more questionable than the custodian being able to override an agreement that they are not a party to. The guaranty you said was between the brokerage and the guarantor. In any case if the custodian agreement undoes the guaranty, Why would the guaranty be needed? Something is missing.

dam1869 I am unclear as to what you are asking. Are trying to have a "combo" plan consisting of BOTH rather than 2 separate plans ? You used the term "hybrid". Are you asking if it is allowed to have both, but as separate plans? Are you asking if one of the items in the "combo" can be a Defined Benefit 403(b) plan ?

The employer "was slowly shut down and has had no income" raises the question of whether the employer still exists. In any case the OP clearly states that it was the Participant making the payment NOT the employer. A Participant being an individual has no 162 etc deduction. Treas rega ciited ermits an employer, it do not see where it says individual, person or Participant. Which brings this back to the issues raised by QDROphile.

After I posted the excerpt, I wondered if I should not have given the whole quote. Now I see that I should have. But I won't bother. The operative phrases are "for the benefit of a disqualified person" and "an act of self-dealing". As for your new scenario, not much changes. Who is the company going to charge for the service rendered ? If no one, then you have misappropriation by a misuse of corporate assets. Your additional worry would be what would happen in an audit of the plan or the company. Service rendered to you or for you is reportable income to you. You might even have under or misreporting charges. No different from private use of a company car or jet. You benefit, you pay. Again, regardless of how many shares you have, a corporate entity is not your private fiefdom, as many like Kozlowski of Tyco found out.

What do you mean by "out there" ? To me "out there" means issued stock. and "outside the plan" means nothing relevant. How is the stock held ? In participant's name ? ESOP? I must be missing something. Are ASG and controlled group etc issues of concern to you ? I see nothing in the post that suggests that there is any other entity involved.

How could a sale price have been set without knowing this? Or am I not understanding the question especially the term "basis" as you use it ? I would have thought that in order to establish the sale price, basis (as in costs) would have had to be calculated first. Gain on sale would be the amount received over basis minus the costs of doing the transaction etc. Basis (as in costs) should be already on the "books" since this block has been an asset for some time. How else could they have been carrying the block ?

That a guaranty is not a loan is irrelevant. The guaranty serves to cause you to benefit. Simple. And No, things can be done in the interest of many, just not those disqualified, otherwise ineligible, or those with conflict of interest issues.

No. Not getting it yet. It is not the setting aside that would cause anything as much as your actions causing the set aside, but that is another issue. Although the letter deals with the IRA lending funds to the corporation, the reverse would be the same result. Mr. Darragh has an interest in the corporation which might affect his best judgement as a fiduciary. Hence the sentence in bold print in the letter... "Accordingly, a prohibited use ... or an act of self-dealing under 4975©(1)(E) is likely to result......." Loan from IRA to corporation or loan from corporation (in which you have a substantial interest) to your IRA is substantially the same. Substance prevails over form. But you now have the authoritative answer that you were seeking. Now that the CTA etc have been called out, they have essentially admitted that it was wrong in the first place. As for using a third party, I do not know. Maybe one of the experts in this area ha an opinion and is willing to share.

As you have now discovered: 1. That many people do something does not make it right. They might never get caught but you might. Is it worth the risk? 2. That some seller of a product says that his product is good, does not make it so. You bear the burden and penalties, if it goes bad. Is it worth the risk? 3. When errors in judgement are discovered and changes are made by purveyors of products, those changes are made at your expense. Is it worth the risk? 4. The quality of the advice you have been getting for a long time. Are you at risk with anything else ? At the least you should have learned that topics are broad and not narrow, which means you have to do your homework and ask good questions when seeking advice. Even more important to check the competency of advisors before you engage and pay. I think that you still do not quite get it. You are apparently still hung up on you the person and will not move to the issue of the corporation. All you have to do is to read the last few paragraphs of the DoL letter. It is plain and simple. You cannot use the corporation in this self dealing manner. The corporation exists for transacting business not to act as your personal checkbook. Doing so places your corporate status at risk and makes piercing of the corporate veil in litigation or disqualification by regulators or the IRS easy. Just pay attention to the last few paragraphs which talk about the corporation.

dbvail Did you omit some info ? You said that the K-1 was from the LLC. How does the LLC get to be a financial institution and outside of the state division of corporations what else exercises any oversight over LLCs ? I have never heard of division of corporations being regarded as regulation and a Real Estate LLC seems more like a private business entity. I usually see the term "financial institution" used in reference to banks, CUs, Trust cos, investment banks etc.

Shouldn't that be Yes ? It is a direct payment to a nonspouse beneficiary, not an eligible rollover.

lltwin An excellent first post. I hope to see many more. Welcome to the fray.