I blogged in the past (here and here)about decisions in which taxpayers have used assets in their IRA to finance a new business. This structure is sometimes known as a ROBS or rollover for business startups. In 2013, the tax court held that an IRA engaged in a prohibited transaction, thereby subjecting the
Understanding Employee Benefits and key developments in the employee benefits field and items of interest to our clients. MORE
prohibited transactions
Ameriprise Avoids Trial On Class Action Suit By Current and Former Employees With $27.5 Million Payment
In 2011, a group of current and former employees filed a class action lawsuit in the District Court of Minnesota claiming that Ameriprise Financial, Inc. and members of its 401(k) Plan fiduciary committee had breached their fiduciary duty to the Plan participants and engaged in self-dealing. The specific actions generating the lawsuit were the selection…
“Having Trouble Understanding Your Fiduciary Fee Disclosures?” DOL Proposes Regulations Requiring New Disclosure “Guide”.
As noted in my previous Blog entries regarding the ERISA Section 408(b)(2) fee disclosures from covered service providers to plan fiduciaries, the original disclosures were required by July 1, 2012. Since that time, the U.S. Department of Labor (DOL) has been requesting copies of the required disclosures from plan sponsors during retirement plan examinations. As…
Labor Advises on Fiduciary Treatment of Revenue Sharing Payments
On July 3, 2013 the Employee Benefits Security Administration issued ERISA Advisory Opinion 2013-03A http://www.dol.gov/ebsa/regs/AOs/ao2013-03a.html (the “AO”) to the Groom Law Group which had submitted a request on behalf of Principal Life Insurance Company (“Principal”). The primary question presented was whether revenue sharing payments received by record-keepers such as Principal are ERISA “plan assets.” If…
Are your 401(k) participant plan loans in compliance with the tax and ERISA rules?
According to the Tax Exempt and Government Entities Division of the Internal Revenue Service (IRS), one out of every four (25%) of 401(k) plans surveyed in a recent study had engaged in prohibited transactions as a result of non-compliant participant plan loans and/or real estate investments that were not valued properly. http://www.irs.gov/pub/irs-tege/epn_2012_1.pdf
The problems …