Belgarath

No, you can't. See 404(j)(1)(B). And if you do make a nondeductible contribution, (and no exception applies) penalty is 10%. See IRC 4972.

Tom, I wish I'd seen the performance. However, with the Christmas season approaching, the best I can do is offer the following composition, which you have my permission to perform at your office party if you are so inclined. To the tune of "The First Noel." In the rooms, at DOL The director did say To certain poor TPA's slaving away In cubicles where they Work without any sleep On the cold Winter evenings with papers piled deep. DOL, DOL, DOL, DOL DC disclosures are tricky as He%%. We looked them up And heard cries from afar From TPA's asking "Will this change the SAR?" And to them all PPA brought the light And gave employees Promise that they'll win the fight. DOL, DOL, DOL, DOL DC disclosures are tricky as He%% And the JCT Gave writeups for thee Using gibberish that's contradictory. DOL, DOL, DOL, DOL DC disclosures are tricky as He%% Participant directed investments are free Or they should be, by golly, in 404© And the statements required, we'll quarterly make Using most recent data not easy to fake. DOL, DOL, DOL, DOL DC disclosures are tricky as He%%

Were the funds embezzled from the PLAN, or from the EMPLOYER? If against the plan, then it's possible that there could be a judgement that provides for recovery from the participant's benefit. See IRC 401(a)(13)© and ERISA 206(d)(4). But I'd certainly rely on legal counsel - the requirements are quite specific.

I Absolutely agree. I threw in my observation in case someone was looking at Pax's question as to status if $5,000 exceeded.

See 1.401(a)(9)-6, Q&A-1, ©(1) last sentence.

Except that if it is a QPSA benefit, then under 1.417(e)-1©, the spouse cannot be forced to receive the QPSA before the participant would have reached NRD, or age 62 if later. But the plan will state this if applicble.

Yes! You're so right! Serves me right for staying up past my bedtime watching baseball and football games.

Take a look at page 7 of the 5500 instructions. Why take a risk of these penalties being imposed (very unlikely, I know) when the DFVC penalty for filing a few days late is so insignificant? For a small plan, I believe it is 10 dollars per day. So what's the big deal about filing, say, 1 week late? As for the IRS penalties, also not an issue. The IRS has issued guidance that a plan that is eligible for, and files under the DFVC program will have the IRS penalties waived as well.

I don't have time to look it all up now, but at the least you should investigate as to whether this is "debt financed income" that will be subject to UBTI treatment. Along with all the other normal fiduciary prudence rules, PT rules, etc., etc...

Me, if it involved living anywhere where the temperature goes over 90 degrees more than 10 days a year. But if the climate is congenial, I'll come to work for any of you for half that figure.

Yes, and Steinbrenner will probably fire Torre - who is arguably the best manager in baseball. But he can't throw the ball or swing the bat for these guys...

I would vote for C as well. But you probably have some other issues as well, which I haven't considered but off the top of my head, withholding was probably incorrect as these amounts were not eligible rollover distributions. Don't know if that needs to corrected, but at the least, the employees should be notified in case they subsequently rolled over their distributions.

I would observe that you shouldn't sell the DOL short on something like this. I have personally seen them be very aggressive with enforcement on complaints by lone participants in very small plans. While I'm frequently not a fan of the DOL, this is one of their good aspects. The very real threat of major fines and especially prison time sometimes provides an astonishing impetus for some of these slimeballs to correct things properly.

"Tell me that I am over analyzing. Tell me that he is a participant and has to be included in the test forever until he is terminated. Tell me I can go back to surfing the internet!!" Dude, surf's up - go hang ten.

I'm not sure there's a definitive answer on this. When reading 1.72(p)-1, Q&A 20, I'm inclined to lean towards the interpretation that what you propose is possible. But this is by no means crystal clear, and I could probably interpret it the other way as well. I'll be interested to see what opinions other folks have.

He seems quite knowledgeable about qualified plans for one of such tender years.

There can be a minimum face amount, but it has to be very low. If you go to the LRM language for prototype documents, I think you'll find it is somewhere in the range of 1,000 to 3,000 for a "maximum minimum" face amount, but I honestly don't recall the specific details offhand. Other than that, yes, I think you are quite right to be concerned with BRF issues.

I agree with you. And even you agree with the broker's position that you don't have to count the 150,000 (which is wrong) you'd still have to bond for 10% of $50,000. I'm no actuary, but in my book, that comes out to $5,000. So I think the broker fails on all counts. Ask the broker to give statutory/regulatory support for his/her position - I expect the tune will change. Perhaps your client didn't really communicate the proper information to the broker. (I'm trying to give them the benefit of the doubt, as it is most unusual for a broker to attempt to sell LESS than the required amount...)

Veba - anyone familiar with my posts will know that I do not by any means hold myself out as an expert in the CG/ASG area. With that caveat, I'm not sure I agree with your above statement. Nor do I disagree, since I'm not certain exactly what you are meaning. So I'll present my two interpretations of what you are saying, and maybe you can let me know which it is? I find it easier to use the terms "controlling interest" and "effective control." The controlling interest is the "80%" test and the effective control test is the "more than 50%" test. You state that for purposes of the 80% test (the controlling interest test) that 5 or fewer must own 80%, and each owner does not need to own an interest in each entity. Interpretation (A). You are saying that if there are, for example, 10 owners, then as long as 5 or fewer own 80% COUNTING ONLY THOSE OWNERS THAT OWN STOCK IN EACH CORPORATION, that not all owners must have ownership in each corporation. Only the 5 or fewer - the rest don't matter. In which case I agree. Interpretation (B). You are saying that to reach the 80%, you can count ownership percentages of owners who do NOT own stock in each corporation. In which case I disagree. The controlling interest test considers the SAME 5 or fewer shareholders used to satisfy the effective control test. Since the effective control test only counts those with ownership in each corporation, it would be the same for the controlling interest test. This was the finding of Vogel Fertilizer. Thanks - look forward to finding out which you mean!

First, I agree with your scenario that you can deduct the full first year's plan cost for 2006. Second, I also agree with Pax's observation. I've seen about a zillion plans (give or take a few bajillion) that use this approach. Apparently the IRS publicly stated that this was ok back in 1997 at one of the ASPPA conferences. Plans have received favorable determination letters using this approach, so they apparently don't have any problem with it. However, I don't know of any OFFICIAL statutory or regulatory approval of this method, so the conservative route would be to proceed as you have outlined.

I agree with PiP. Sounds like a potentially very complex determination. One other very brief observation, which may make no difference whatsoever but COULD depending upon ownership: attribution for ASG is IRC 318 attribution, rather than 1563 attribution which you use for CG detrmination.

I think your initial instincts were correct. I can't be sure, but it appears to me that you are focusing solely on 4975(e)(2)(E). But this person is, at the very least, a fiduciary under (E)(2)(A), and therefore, in the absence of a specific exemption, you have a PT since you have a transaction described in ©(1) between the plan and a disqualified person as defined in (E). There are some folks on these boards who are experts in PT's who will likely give you a better answer, but that's my 2 cents worth anyway.

I think you can recognize the change. Take a look at 1.401(a)(9)-8, Q&A's 6 & 7 for some discussion of the RMD issue with regard to QDRO's.

Seems reasonable. In a real case last week, we had a census come in, with three employees listed in the "terminated" column. Next to that column, there's a column entitled "reason for termination." I assume Calvin Coolidge filled out this census, because the reasons for the three terminations were respectively listed as: shot slow lied.

Thanks Gompers. Mr. Watson states it far better than I ever could! Earl - just one little point - the 1563 cite/wording you give is the "new" 1563(a)(2) that eliminates the 80% test. However, this change is only for determining whether the group is subject to tax limitations under 1561. The same law (American Jobs Creation Act of 2004) added 1563(f)(5) to continue to apply the "old law" rules for all other purposes under the tax code.