stephen

You are correct about the increased contribution amount achieved by using dividends to make debt repayment. The service has said on many occiasions that the dividend must be reasonable. As long as the dividend is reasonable it can be used to pay down the debt and release shares. The shares released by the debt payment are not subject to 415. Earnings does not count as an annual addition. The shares released by the dividend are usually shown as dividends thus separate tracking is not required.

Related comment- Why would you offer Roth 401(k)'s when considering the two sentences in bold below? EBIA Comment: The final regulations generally apply for plan years beginning on or after January 1, 2006. (The preamble discusses the interplay between the effective dates of these regulations and the final 401(k) regulations for non-calendar-year and collectively bargained plans.) The preamble reminds plan sponsors that “there are other aspects of designated Roth contributions” not addressed by the final regulations that nevertheless must be reflected in the plan’s terms. And the preamble notes that the final regulations do not address the fact that many EGTRRA provisions, including the designated Roth provisions, will not be effective after December 31, 2010 unless future legislation extends the expiring provisions beyond that date. For more information, see EBIA’s 401(k) Plans manual at Sections IX.A (“Elective Deferrals”), particularly IX.A.12 (“Designated Roth Contributions (Option Available in 2006)”).

I am not convinced that you should allocate based on compensation unless that is what your document provides for. Perhaps participants who have not been deferring do not have a balance and you do not want to allocate to them their pro rata share of the forfeiture as this would give people balances who previously had no balance. This is where the administrative procedures come into play. They provide for the trustee to elect allocation as an additional match or based on compensation.

If your docment says that you pay towards expenses, then reduce match then reallocate I thiunk you have to follow the document and reallocate. If the document does not specify how you should reallocate perhaps the document allows for an administrative proceedure to be adopted (we use Corbel) and this proceedure provides for the allocation method of those unallocated amounts. It is my understanding that forfeitures should be reallocated in the year in which they were forfeited.

FWIW, I agree with Tom.

Lori, I know of no restriction that would keep a plan from paying out of an ESOP over a 5 year period and rolling over each of the payments. It seems that the initial distribution request to roll over the distribution would stay in effect for the full term of the distribution. I had one privately held employer pay using the note option and they only did it once as the administration of this distribution was a pain to them. Stephen

Many Thanks!

Tom, Could you add a revised Christmas puzzle including all 80 puzzles and the compete song list. We are hosting the appetizer for a progressive dinner next Sunday and I think this will keep people talking all night. Thanks, Stephen

Here you go- by the way it i an Excel file. I had to use the txt extension to get it on the website. By the way I ran into Tom at the ASPPA conference and he mentioned how popular this movie quiz was while the other movie quiz did not get nearly the attention. In my opion it is because this one is formatted much better. We had a great time at the office working on it. movie_quiz.txt

Just a thought, have the db 415 rules changed since 2002? If yes that could explain why you are coming up with a different answer as the question you list is from 2002. That is one of the problems when using old materials to help study for a pension exam.

The calculation you showed should work just fine.

This is why you should not have a 401(k) plan with retroactive entry dates...

YES

It depends- What does the plan document say regarding 415 calculations? If a leveraged ESOP in a C-Corporation passes the 1/3 test then you can ignore the interest allocated. Thus, only look at the principal as an annual addition. If the document allows you can look at the current fair market value. In your case it seems you are better off if you stick with the principal being allocated (the calculaiton you show). Please confirm that this is an ESOP only (i.e. no salary deferrals) as this brings other matters of consideration to the situation.

And the drinks have such great reviews... I wonder what you are waiting on. perhaps you can buy a 5 pack and get out the BIG GUN! Happy Thanksgiving to All!

I heard mention at the ASPPA conference that the service was looking at this "windfall" and contemplating allowing for the employer to contribute half of the missing deferral plus earnings instead of the whole deferral.

25% of eligble compensation including interest on the loan is deductible. If the deductible limit is exceeded the 10% penalty still applies.

When is the eligible compensation exclusion for deferrals only to have changed? A few years ago when we started excluding deferrals from annual additions or with the final regs? So what if you have a plan with deferrals only? Is there no eligble compensation and thus no deduction? #2 Part 3- Since the participant is under age 50 you have a problem because they are not eligible for catch-up and since you created the problem by your plan design you have plan design issues. I am sure there was more said but I did not get it all...

Another topic I found intriguing was the Safe Harbor notice. In 2000-3 you could incorporate a list of 4 items in the safe harbor notice by referencing the SPD. However, it seems the final safe harbor regulations do not include one of these items: withdrawals and vesting (see 1.401(k) - 3(d)iii). Thus, since the final regs apply to the 2006 plan year you need to add withdrawals and vesting to your safe harbor notice (unless it was already included). It seemed the IRS was suprised by this change (as if it was perhaps a scriveners error on their part). But to follow the letter of the law the 2006 notice should include these items. They did give the impression that if you had already sent out your 2006 notice without including these items that it would probably not violate your plans safe harbor election. They (IRS Marty Pippins & Jim Holland) said they would look into it further. Also, IRS Question #43. If a profit sharing plan is adopted but no contributions are ever made, is a 5500 required? Answer: YES. It is our holding that a plan exists, even if the corpus of the trust is never funded.

#10 Wil Wheaton, River Phoenix and Corey Feldman are in this 1986 movie. #11 Hugh Grant and Julia Roberts enough said. #15 Tagline: Five Criminals . One Line Up . No Coincidence Plot Outline: Five villains in New York are rounded up by police in an unconventional manner that worries them. After release, they get together for a spot of revenge, but someone else is controling events. #16 Mel Gibson, Joaquin Phoenix and Rory Culkin are in this M. Night Shyamalan movie. #60 Tagline: Have a nice end of the world. Plot Outline: A firefighting cadet, two college professors, and a geeky-but-sexy government scientist work against an alien organism that has been rapidly evolving ever since its arrival on Earth inside a meteor

I am not sure of the stance of the DOL but if I were a participant in this plan and the employer made me pay for the attorneys fees from my retirement account I imagine I would be contacting the DOL to find out their opionion.

I have clients who have had success with www.accurint.com

Tom, Shame on you- 3(a - 2) = 5a - 10 3a - 6 = 5a - 10 subtract 3a from both sides -6 = 2a - 10 add 10 to both sides 4 = 2a divide both sides by 2 2 = a Check your work: 3(2 - 2) = 5*2-10; 3*0 = 10-10; 0=0 Your way does not work since you are dividing by zero... thus 3 does NOT equal 5. Perhaps you can incorporate this into your song this year.

I believe that in order to self-correct you will have to pay earnings to all affected participants. The penalty is on only the lost earnings. For one deposit is it worth considering asking for lieniency?

I believe that the participant can take their deferrals as a hardship leaving only the loan balance in the plan. The loan is secured initially by the account balance but going forward there is no security. For example, if the defarral account lost money due to investment losses you are not going to penalize the loan holder in ant fashion.