Self directed 401k

"S" corporation shareholders are wife. Husband and daughter. They opened a self directed 401k with profit sharing for the business. In lieu of making salary deferrals they want to contribute real property (land). This land will come from a  partnership which is same husband, wife  daughter ownership. How can this be done. Then they are wanting the "s" corporations match to be land that the "s" owns.  How can they make contributions without a salary deferral? How are they going to put land into three different 401k accounts? 

Chances are this is a prohibited transaction if the s-corp or any of the shareholders are getting any benefit from the land. For example if it's the piece of land that the corp's office is located on, it would be a PT because the corp (a disqualified person) is using plan assets (the land). 

At a minimum, I would advise you to read this and consult an ERISA attorney before proceeding.

3 hours ago, Lori moore said:

In lieu of making salary deferrals they want to contribute real property (land).

Of course this can't be done...I'll go out on a short limb and add "period."  Salary deferrals must be withheld from pay.  How is land withheld from pay?

3 hours ago, Lori moore said:

Then they are wanting the "s" corporations match to be land that the "s" owns.

Well now you're saying the match is the land contribution; that's slightly different...still not possible.  I agree that it's a PT.  (Even if possible somehow, for tax purposes, it would be treated as a sale of the land, and that's almost certainly what they think they are getting away from.)

I'd venture that this is just a typical fugazy idea that needs to be nipped in the bud.  It's usually not wise to have a corp. own land, so they probably have either gotten bad advice or done things on their own with no advice in the past.  Your value added is in telling them "no."

Just say NO . . . .  unless they want to be subject to an EBSA press release . . . 

https://www.dol.gov/newsroom/releases/ebsa/ebsa20130507-0