stephen

Page 2 #2 Willy Wonka and the Chocolate Factory. This is from the very first one of these Tom posted. I still see these scenes in my head from before...

I agree with your analysis.

#35 Braodcast News #36 Butch Cassidy and the Sundance Kid #37 Basic Instinct #38 The Sting #39 The Maltese Falcon #40 Doctor Zhivago #41 The Good, The Bad, and The Ugly

Don't forget the penalty is on the earnings from the late deposits not the late deposits themselves. Thus, the penalty is probably substantially less than 10% of the deposits. I agree that you should consult with the client and let them know the situation and take guidance from them not the broker. If you have a question regarding late deposits on your year end information request where the client has told you they did or did not have any late deposits this could be the starting point of the conversation.

They cannot receive cash in lieu of shares. Thus, if they cannot receive shares in the plan due to 1042 they cannot receive and allocation of cash in the plan to make up for the shares they are not receiving.

If there is not a 1042 election the now 25% owner and the son would be allowed to share in the allocation of those shares. There is not a problem with the ESOP starting with a small number of shares.

FEMA - Fix Everything My Ass (Having just returned from a trip to New Orleans where I saw this on a t-shirt)

Then let's just set the HCE limit at $0.01. Thus, everyone would be an HCE and no testing would be required. Now that would be pension simplification!

Mike, For what it is worth I agree with you on this one. The gateway does not apply in this instance. Perhaps Tom Poje will chime back in on the topic since he knows so much about Safe Harbor Plans (Speaks and sings on this topic) and Coverage Testing (wrote the book on this topic) when the gateway actually does apply. Stephen

You should use the limit in effect for the determination year. In your example the 2004 limit of $130,000 will be used for determining who is a Key employee for the 2004 determinaiton year which of course is used for your 2005 plan year top heavy determination.

$130,000. Since the plan year began in 2004 you use the 2004 limit. (I Stand corrected by Judy below )

I agree as long as you include the earnings that go with the deferrals.

If you go to the thread you can copy the web address form the http click on the insert Link Icon - (Globe with Chain Link) Paste the web address in the first field then name in the second field (e.g. "Link Here"). Perhaps the thread you are referring to is this one: Link Here

Please include a link to the thread so we do not have to search for it. That said, I believe there are still differing opinions on this matter.

You do not have to force a participant to take a loan if the loan would cause a hardship. There are many posts on these boards to support this statement. If the participant otherwise qualifies for a hardship distribution under the plan document in my opinion it is ok to proceed with the hardship distribution.

The IRS Q&A's are questions posed by ASPPA members and answered by high ranking officials at the IRS. Thus, I do not consider them unattributable. It is my understanding that any of the Q&A's that are answered in writing the IRS stand behind while the Q&A's answrewed from the podium are generally not as clear cut. It seems this is one of the clear cut answers form the IRS.

Hmmmmmmmm. Perhaps they are referring to the error in Pub. 560...

Here's hoping Wakefield has the knuckler working tonight and beats the evil empire. Will Johnny Damon be cheered or jeered?

Q4 Why is the 415 limit used the one effective at plan year end not plan year beginning as all of the other limits? (Perhaps because not all things in the complicated world of pernsion law make sense.) It's a good thing this is complicated. I think of it as job security.

Don't go to www.google.com for the Da Vinci Code Quest (a series of 24 puzzles relating to the movie) or to http://puzzles.usatoday.com/sudoku/ where USA Today has the last 30 days of Sudoku puzzles or you might work oin puzzles all of the time. OOPS! Maybe I shouldn't have said that!

Perhaps Tom needed it for his name after all "Om" is not a very appealing name or perhaps there is in fact a different answer for #6. I am certain "Mr. Duck" will fess up if he in fact did make a error on the board.

I still don't buy it- The attachment refers to the 2005 limit for HCE determination as $95,000. However, it does not discuss the fact that when looking at HCE compensation you look at the look back year 2004 and use $90,000. I stand behind my original post.

Other than the audit comment as you are already paying for those and this is not an issue for you. I stick by my original post. Please note my comments are based on my working with MUCH smaller plans.

While I cannot directly answer your questions it seems to me that a safe harbor plan is a much better fit than auto enrollment. Auto enrollment for low paid participants leads to very small account balances and an increased participant count (that leads to higer plan expenses e.g. 5500 Audits - your reference to having 140k employees leads me to believe that you have 140 employees not 140 participants nor 140,000 employees). My administration experience has been that safe harbor plans do not necessarily significantly increase participation rates. Thus, you can estimate the cost by calculating the increased match based on your current contributions. You should keep in mind that if a significant number of non-deferring participants begin deferrals due to the increased matching contribtuion that you could face a large contribution increase.

Actually the fact sheet below - seems to provide more guidance than expected by E: Fact Sheet: Voluntary Fiduciary Correction Program U.S. Department of LaborEmployee Benefits Security AdministrationApril 2006On April 19, 2006, the Department of Labor published in the Federal Register a 2006 Update of the Voluntary Fiduciary Correction Program (VFCP), which simplified and expanded the original VFCP published in 2002. The VFCP is designed to encourage employers to voluntarily comply with the Employee Retirement Income Security Act (ERISA) by self-correcting certain violations of the law. Many workers can benefit from the VFCP as a result of the increased retirement security associated with restoration of plan assets and payment of additional benefits. It also will help plan officials understand the law. The 2006 Update of the VFCP describes how to apply, the 19 categories of transactions covered, acceptable methods for correcting violations, and examples of potential violations and corrective actions. The Department issued the Update in response to public and internal comments on the preliminary revision of the VFCP published in April 2005. The 2006 Update of the VFCP will be effective May 19, 2006. Until that date, applicants must rely on the prior versions of the VFCP. After May 19, 2006, applicants must use the provisions of the 2006 VFCP Update. The Department also provides applicants conditional relief from payment of excise taxes for certain VFCP transactions under a class exemption related to the VFCP, which is discussed in more detail below. The amended class exemption will also be effective on May 19, 2006. Note: the following describes the provisions of the 2006 VFCP Update. Applicants may not use these provisions until May 19, 2006. Who Is Eligible Anyone who may be liable for fiduciary violations under ERISA, including employee benefit plan sponsors, officials, and parties in interest, may voluntarily apply for relief from enforcement actions, provided they comply with the criteria and satisfy the procedures outlined in the VFCP. VFCP Criteria Persons using the VFCP must fully and accurately correct violations. Incomplete or unacceptable applications may be rejected. If rejected, applicants may be subject to enforcement action, including assessment of civil monetary penalties under Sections 502(l) and 502(i) of ERISA. How To Apply Applicants do not need to consult or negotiate with EBSA to use the VFCP. They merely need to follow the procedures outlined in the notice published in the April 19, 2006, Federal Register. Violations can be fully and correctly resolved in four easy steps: Identify any violations and determine whether they fall within the transactions covered by the VFCP; Follow the process for correcting specific violations (e.g., improper loans or incorrect valuation of plan assets); Calculate and restore any losses or profits with interest, if applicable, and distribute any supplemental benefits to participants; and File an application with the appropriate EBSA regional office that includes documentation showing evidence of corrective action taken. Covered Transactions The VFCP provides descriptions of 19 categories of transactions and their methods of correction. Corrective remedies are prescribed for the following fiduciary violations involving employee benefit plans: Delinquent Participant Contributions and Participant Loan Repayments to Pension Plans Delinquent Participant Contributions to Insured Welfare Plans Delinquent Participant Contributions to Welfare Plan Trusts Fair Market Interest Rate Loans With Parties in Interest Below Market Interest Rate Loans With Parties in Interest Below Market Interest Rate Loans With Non-Parties in Interest Below Market Interest Rate Loans Due to Delay in Perfecting Security Interest Participant Loans Failing to Comply with Plan Provisions for Amount, Duration, or Level Amortization Defaulted Participant Loans Purchase of Assets by Plans from Parties in Interest Sale of Assets by Plans to Parties in Interest Sale and Leaseback of Property to Sponsoring Employers Purchase of Assets from Non-Parties in Interest at More Than Fair Market Value Sale of Assets to Non-Parties in Interest at Less Than Fair Market Value Holding of an Illiquid Asset Previously Purchased by Plan Benefit Payments Based on Improper Valuation of Plan Assets Payment of Duplicate, Excessive, or Unnecessary Compensation Improper Payment of Expenses by Plan Payment of Dual Compensation to Plan Fiduciaries Acceptable Corrections The VFCP provides rules for making acceptable corrections involving the transactions listed above. Applicants generally must: Conduct valuations of plan assets using generally recognized markets for the assets or obtain written appraisal reports from qualified professionals that are based on generally accepted appraisal standards; Restore to the plan the principal amount involved, plus the greater of lost earnings, starting on the date of the loss and extending to the recovery date, or profits resulting from the use of the principal amount, starting on the date of the loss and extending to the date the profit is realized; Pay the expenses associated with correcting transactions, such as appraisal costs or fees associated with recalculating participant account balances; and Make supplemental distributions when appropriate to former employees, beneficiaries, or alternate payees, and provide proof of the payments. VFCP Documentation Under the VFCP, applicants must provide supporting documentation to the appropriate regional office of EBSA. Required documentation generally includes: Copy of relevant portions of plan and related documents; Documents supporting transactions, such as leases and loan documents, and applicable corrections; Documentation of lost earnings amounts; Documentation of restored profits, if applicable; Proof of payment of required amounts; Specific documents required for relevant transactions, as outlined in Section 7 of the VFCP; Signed checklist; and Penalty of perjury statement. The VFCP also provides a model application form. While use of this model application form is entirely voluntary, EBSA encourages its use to avoid common application errors that frequently result in processing delays or rejections. Restitution To Plans Applicants must restore the plan, participants, and beneficiaries to the condition they would have been in had the breach not occurred. The VFCP includes an online calculator to assist applicants by automatically calculating correction amounts that must be paid to the plan. Plans must then file, where necessary, amended returns to reflect corrected transactions or valuations. Applicants also must provide proof of payment to participants and beneficiaries, or properly segregate the affected assets in cases where the plan is unable to identify the location of missing individuals. Payment of the correction amount may be made directly to the plan where distributions to separated participants would be less than $20 and the cost of correction exceeds the distributions owed. Excise Tax Exemption The Department has adopted an amendment to PTE 2002-51 to expand the relief under the exemption to additional transactions included in the 2006 Update of the VFCP. Excise tax relief is being provided for prohibited transaction violations involved in the purchase of an asset by a plan when the asset has been determined to be illiquid, and/or the subsequent sale of the illiquid asset by the plan. The second transaction covers the use of plan assets to pay expenses to a service provider for services that are characterized as “settlor expenses,” provided such payments were not expressly prohibited in the plan documents. Additionally, the Department has eliminated a notice requirement applicable to de minimis situations involving delinquent participant contributions and/or the failure to transmit participant loan repayments. The amendment was published simultaneously with the VFCP Update. Contacts For Additional Information For additional information, VFCP applicants may contact the appropriate EBSA regional office at our toll-free number: 1.866.444.EBSA (3272) and request the VFCP coordinator.This fact sheet has been developed by the U.S. Department of Labor, Employee Benefits Security Administration, Washington, DC 20210. It will be made available in alternate formats upon request: Voice phone: 202.693.8664; TTY: 202.501.3911. In addition, the information in this fact sheet constitutes a small entity compliance guide for purposes of the Small Business Regulatory Enforcement Fairness Act of 1996.