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That is correct. The financials would have never taken the loans off.

Has anyone ever had any luck with writing a report that would inception to date contributions, gains/losses, etc? Is it even possible to write such a report?

My mistake. I meant the DOL. Sorry for the confusion.

The instructions to the 5500 as printed by the IRS.

I was reading the updates on the changes to the 2005 Form 5500. I see the IRS has discontinued the Sch. T and placed a coverage question on Sch. R. However, it does not look like the instructions changed for who has to file a sch. R. For instance a profit sharing plan that had zero distributions does not have to file a sch. R. I get the impression though that this is not want the IRS intended and this schedule should be required. Any other thoughts or comments?

If his comp is large enough and if he is not worried about protection from creditors, I would recommend a SEP.

You also might want to make sure you are not missing a couple of things. If the plan is top heavy and the participant is still employed, you will have to give them the top heavy and gateway minimum. It sounds like you also fail the ratio % test for coverage. If your document has failsafe language then you will have to give them a contribution.

That is something I have been wondering. Can you use that if you are not using the VFCP? I was thinking that it would also change with self correction outside of VFCP but I have not been able to find anything. If someone knows where this is, please provide me with a reference.

A POP cafeteria plan fails the key employee 25% concentration test. Would the acceptable correction method be to make all benefits taxable in the calendar year they are attributable to?

Correct me if I am wrong, but you can only do that if the union employees are covered under a collective bargaining agreement that covered retirement benefits. I am getting the impression that these union employees are not covered under a CBA.

It is only semantics. The principle is the same.

Since your contribution was made in 2005, just allocate to 2004 what you truly need. Let's say you originally thought the allocation was $1,000 and this was all contributed in 2005. You had a $100 in forfeitures which required a contribution of $900. Now after your correction it turns out that the allocation is truly only 950. Just allocate $850 for 2004 and the other $100 as a pre-funded contribution for 2005. I hope that makes sense.

If the contribution was made after the end of the plan year, just take it away from the termed participant and reclassify it as a pre-funding of the 2005 contribution.

You would only list the excise tax, not the lost earnings on line 6a. The lost earnings is listed in Part IV of the 5330. Line 6 is new to the form. If my understanding is correct, this is only used if the IRS actually comes in and assesses this penalty due to an employer's failure to correct.

Here is a prior discussion: http://benefitslink.com/boards/index.php?showtopic=23366&hl=

Yes, you should go ahead and file a 5330. In my experience the IRS doesn't assess late penalties that often. When they do, they are fairly minimal. Yes, you should file a 5330 for 2004. You will list the amount of lost earnings for 2003 and then list the amount of lost earnings for 2004. You basically keep paying the 15% excise tax every year until you correct the situation.

A participant took out a loan for a principal residence and was amortized over 30 years. Due to unforeseen circumstances the property was never used as the principal residence. IRC 72(p)(2)(B)(ii) states -- Clause (i) shall not apply to any loan used to acquire any dwelling unit which within a reasonable time is to be used (determined at the time the loan is made) as the principal residence of the participant. I interpret this as meaning since the intent at the time the loan was made was truly to purchase a principal residence, this loan is valid and no correction is needed. Anyone else have a different opinion?

I don't know the answer but I would suggest reading the income tax treaties between the US and the UK.

The gateway only deals with the non-elective portion. If you receive any type of contribution then you must receive the gateway minimum. Your examples: 1. You are correct because at no time did he receive any type of non-elective contribution. 2. You are incorrect. He did not receive any non-elective contribution triggering the gateway minimum.

Yes. Some additional information can be found in Rev. Ruling 2004-13 that I think supports this conclusion. For what it is worth, The ERISA Outline Book agrees with this position as well.

Your assets would not be combined. Your participant counts on Schedule T would be combined.

Yes, you can but the plan has to allow for it. Your plan is not required to do so.

There is no guidance in this area. My position is that you do not issue a 1099 to the participant because they never received a benefit. I also charge the clients the difference in the amount of the fee. For example, if the distribution expense is $50 and the participant balance is $25, I charge the client the difference of $25.

No. You had 30 days after the 404(a)(6) deadline to provide any further annual additions for the previous plan year (Treas Reg. 415-6(b)(7)(ii)). In your case that was 5-15.

I assume that since you say partners that the filing entity is a partnership or LLC. I am also assuming they have already filed their tax return which was due 4-15. The had until 5-15 to make any additional annual additions for the 2004 plan year. They cannot deduct any further contributions for the 2004 plan year. In your case, they are completely done with the 2004 plan year.