Large loss/worthless asset

[Chippy]

I have a small balance forward profit sharing plan.   195,000 in total assets.  Owner holds 165,000 of those assets, 2 other employees.    One of their assets was a piece of land/building valued at 120,000 and it is now worthless so the plan is taking a hugh loss.     I want to have the owner take the hit for the loss of the asset, and he is ok with that,  are there any issues with doing that?    I know this asset was a bad choice from the beginning...............

 

 

[Flyboyjohn]

The DOL Voluntary Fiduciary Correction Program might offer a perfect solution to your client's problem IF the owner is willing to acknowledge a fiduciary breach and make the plan whole by "purchasing" the real estate from the plan for original cost plus lost earnings.

[K2retire]

21 hours ago, Flyboyjohn said:

The DOL Voluntary Fiduciary Correction Program might offer a perfect solution to your client's problem IF the owner is willing to acknowledge a fiduciary breach and make the plan whole by "purchasing" the real estate from the plan for original cost plus lost earnings.

Or it might not. We have a similar situation and the DOL investigator assigned to this investigate plan has been refusing to allow that since 2014.

[Flyboyjohn]

Were you trying to use VFCP after the investigation had already begun?

[K2retire]

No, just trying to negotiate to close the investigation and get rid of the asset so that the plan can be terminated.

[Flyboyjohn]

Going in under VFCP before any investigation and jumping though all their hoops will result in a non-action letter (they don't have discretion) but as you're seeing they don't have to allow the same relief during an ongoing investigation.