Trust Assets

[Randy Watson]

What are the ramifications for having plan assets titled in the name of the plan sponsor as opposed to the trust? This was merely an oversight by the plan sponsor.

[Everett Moreland]

Perhaps the facts will allow you to conclude that the employer holds as a trustee or nominee of the trustee.

[namealreadyinuse]

The ramifications are catastrophic. The asset will be treated as a distribution or (worse) a reversion to the employer. Everett is correct - you need to "find" different facts.

[Randy Watson]

There is plenty of evidence that the assets were clearly intended to be plan assets. What are the chances that the IRS will take that position? It does not seem likely that the IRS would force us to treat it as a distribution when these have been treated as plan assets for many years.

[WDIK]

It does not seem likely that the IRS would force us to treat it as a distribution when these have been treated as plan assets for many years.

I concur. No need to scurry to the bomb shelter.

[namealreadyinuse]

The chances that the IRS will take that position are 100% if assets are titled in the name of the plan sponsor my friend. They have no choice. That is what happened. But . . . I am sure that your intent will save the day on audit.

Look, legally, all 5500s are wrong, all participant statements are wrong, corporate deductions are wrong, etc. Were any of those assets paid for with salary reduction? That is not pretty.

BTW, the DOL would enforce the plan asset and trust requirements, not theIRS.

[Guest Pensions in Paradise]

Retitle the assets properly and move on with life.

[WDIK]

The chances that the IRS will take that position are 100% if assets are titled in the name of the plan sponsor my friend. They have no choice.

It is difficult to talk in absolutes, but in my personal experience (only two audit situations) the IRS has taken that position 0% of the time. (Although when talking to clients, I point out the same concerns namealreadyinuse has raised.)

[Randy Watson]

Good advice. Thanks.

Namealreadyinuse, what exactly did you mean when you wrote that the DOL would be enforcing the plan asset and trust requirements not the IRS. Does that mean that the IRS does not have authority to pursue this?