LIBERTYKID

I am trying to get at the issue of if real estate is held in an IRA, and the IRA holder improves the real estate or manages the real estate at no cost, is such an action a prohibited transaction? Assuming the IRA pays for the cost of all materials, and cash is not being paid by the IRA to the individual, where is the prohibited transaction?

Perhaps I can argue the regs were only proposed until 1/1/2002, and that the loans occurred in 2001?

Loans from a 401(k) plan were provided to participants in accordance with proper documentation. Plan Administrator (employer) forgot for over a year to commence loan repayments from the participant's salary. Is this an operational error that can be corrected under one of the alphahbet soup correction programs? The employer screwed up but did so as the employer and not as the plan administrator. But the plan administrator should have noticed that loan repayments were not being made (evidently the participants did not). If it is an operational error, how do you correct? I know you can reamortize the loan (not more than over five years from the original term) with interest accruing from the date of the original loan, but is there anyway around defaulting the loan and taxing the participants on the amount of the loan? If not, why get relief at all?

Is there any prohibition on permitting a hardship withdrawal from elective deferrals including catch-up contributions? Catch up contributions are defined in the Code (I think) as elective deferrals. If the plan provides that a hardship distribution cannot exceed the amount of the participant's elective deferrals, then does the plan permit hardship withdrawals from catch-up contributions automatically?

I have a client that said that ADP is taking the position that the limit is $11,000 plus $3,000 and you can't have both the $3,000 and the $1,000 catch-up at the same time. So the limit is $14,000 and not $15,000. The law is not unclear to me and I believe that $15,000 is the correct answer, but if someone can explain how the statute can be interpreted to limit someone to $14,000, please let me know.

The employer safe harbor contributions were profit sharing type contributons to everyone. Now I want to add the 1 percent match.

A 401(k) plan provides for salary deferral contributions and employer discretionary safe-harbor contributions. The employer wants to add a matching contribution but only make a 1 percent match on a participant's salary deferrals. Is there any way the matching contribution would not be subject to the ACP test?

When can a sponsor change the integration level for a SEP? I know that with a qualified plan there are two camps, one that says prior to the end of the PY and one that says before the contribution is due. But what is the rule for SEPs?

A SEP contribution of $22,609.39 would give the owner (who also has $40k of W-2 income from a nonadopting nonrelated entity) a maximum 15% contribution (integrated at the 2001 TWB of $80,400). Owner (15%) $15,781.45 (1/2 SE Tax $4,180.95 E/ees $3,413.97 each. Proof: (assuming SS tax is correct!): .15 X ($132,000 - $6,827.94 - $4,180.95 - $15,781.45) = $15,781.45 Hi Gary. Just wondering how you got the social security tax in the above example. I assume you take (80400-40,000) * .124 and then net self employed comp. x .029 but I don't total up to $4,180.95.

Controlled group members 1 and 2 both sponsor Section 401(k) plans. An employee from controlled group member 1 transfers to member 2. What is the best way to transfer the employee's account from member's 1 plan to member's 2 plan? Can I use the new EGTRRA 411(d)(6)(D) plan transfer provision?

With regard to No. 2, the plan is publically traded. With regard to No. 1, if we call the plan as ESOP, provide for the proper voting rights, diversification, and right to elect employer shares with regard to the salary deferral contributions, then doesn't the plan still meet the exception set forth in 407(B)(2)(iii)?

ESOP provides for all salary deferrals and matching contributions to be invested in employer stock. Plan intended to provide for the standard 55 and 10 diversification option. Participants are now asking for an election out of stock on a yearly basis. (must have been something in the news lately). Will the plan still remain an ESOP if this yearly election is provided? 1. I assume the percentage of stock held by the ESOP will have to be monitored to ensure compliance with the primarily invested in employer stock requirement. Let's assume more than 50% of assets will always remain in employer stock. 2. It appears that what is being done is making the 55 and 10 diversification option more liberal. I previously asked a question re: this and was told it can be done but there may be securities concerns. I think the right to demand employer securites would apply to the shares that are diversified prior to a particiipant attaining 55 and 10. What am I missing? Any comments.

Employer stock held in ESOP is registration-type security. With regard to pass-through voting, do all items that are voted on at a Board meeting have to be voted on by participants in the ESOP? Is there any type of de-minimus exception? Can nonvested participants with employer stock allocated to their accounts be excluded from voting? :confused:

Can an ESOP eliminate the 10 year participation requirement and require that a participant only attain age 55 prior to being given the diversification election right. The "rights, benefits or features" regulations specifiy that the diversification election is exempt from testing only for "qualified participants", so I am concerned about messing with such definition but I can't see how being more liberal would be discriminatory.

It is not a for profit company; perhaps I should have referred to "Employer contributions" and not "profit sharing contributions"

An employer offers a 403(B) program to its employees, but matches and makes profit sharing contributions to a qualified plan. If the employer did not make matching contributions or profit sharing contributions, I would conclude that no 5500 was necessary. But since the employer is now providing funding with regard to the 403(B) arrangement, is this fact enough to create a situation where the employer involvement is enough that the 403(B) plan should file a Form 5500? Yes, the qualified plan does file a 5500.

On a similar issue, did the IRS/DOL say anything about "terminated " 403(B) plans being amended for current law. I know of a number of organizations that have gone out of business but are having someone sign the form 5500 for subsequent years because it seems that the form must be siged by someone. do these "terminated" plans have to also be amended?