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Andy, what you say does make sense, however, the IRS has already reviewed it and says that this is not the case. Of course the IRS agent reviewing the plan could be incompetent.

What has happened to Mike Preston? I have not seen any posts by him in months.

Yes, there is a sample exam in the study guide.

I am not 100% sure now that you ask but I was led to believe that this is a funding deficiency.

We have a client that has terminated their DB plan. They have not yet received approval from the IRS but they have submitted the termination to the IRS. They have a $200,000 funding shortfall. They want to go ahead and fund this but Principal (their provider) is telling them they cannot accept the contribution. Is this correct? Can they not fund the shortfall until they receive approval of the termination from the IRS?

The document vendor is wrong as the IRS has already pointed that out to you. You can't cutback someone's vesting as I stated in my previous post.

Your document is saying that someone with 5 years of service is 100% if the plan is not top heavy. Then if the plan becomes top heavy then they go from 100% vested to 80% vested. This is what the IRS is commenting on which you cannot do.

There is no requirement that you make a contribution unless you write your plan doc that way.

The Washington Hilton is okay. I don't think the rooms are worth what you pay for them. That is the only bad thing I have to say about the conference. Everything else about the conference is done fairly well. The classes are setup in a "classroom style". I think your dress style will be fine. I also think you will get a chuckle out of what other people wear. Last year I saw men wearing some tight striped polo style shirts with suspenders.

Very interesting. Please post the next chapter.

I would like your opinions on whether or not the following situation is a prohibited transaction: A plan sponsor has a brother-in-law as the plan broker. The brother-in-law owns an outside business. The broker wants the plan sponsor to invest part of his own segregated account (not other participants) into the privately held stock of this company. Is this a prohibited transaction?

Flogger, I disagree. I want to hear it.

No, it is not required but it will reduce the amount of audit work performed which lowers the price of the audit.

My initial thought process was that also. I was thinking since this is an overpayment that the difference should be reported as a receivable. Do you agree? If so, would you report this as other income or other contributions?

A participant is overpaid in 2003 and this is not corrected until later in 2004. How should this be reported on Schedule I of the 5500 for the 2003 plan year?

How can you provide a 10% contribution for the plan year when you don't even know what your compensation figures will be for the year? You cannot convert to a safe harbor plan as of 9-15 if you plan on having your notices out by 9/30. You will have to get your notices out before the effective date of the change and your safe harbor 401(k) provisions will have to be in effect for at least 3 months.

I agree that is how it is written. However, I wouldn't want to stand on the position that the IRS would interpret it that way.

First, your document will have to state that top heavy minimum is given to non-key employees. Second, you are going to have a problem if you have an HCE that is not key. Your document will state that the HCE has to receive the top heavy minimum. In short, I think you are going to have to do some kind of top heavy calculations depending on the demographics of the company.

That is what I am being told by another source. Because a VEBA is a funded welfare benefit plan then a 5500 must be filed.

A client had late deposits, blah, blah, blah. Anyway, the calculation could not be done in time so we filed Form 5558 to request an extension for the 5330 along with a check to cover the taxes that would be due. Now that we have finally finished the calcuation, there is an overpayment of taxes. How do you go about getting this back? The instructions to the form 5330 say to file an amended return. Well how do you file an amended return when you haven't even filed the original?

Even if there are less than 100 participants?

I do not know too much about VEBAs. I have a client that set up a VEBA to fund certain health benefits for employees. I know the VEBA has to file a form 990 each year. Does the VEBA simply file a form 990 and then the welfare benefit (i. e. health) file its own 5500 covering the health benefits?

I haven't done one of those in a while. If my memory serves me correctly, I believe every HCE has to be tested separately and the 2+/2% spread is not available. In other words each HCE's deferral percentage must be no higher than 1.25% above the NHCE ADP.

DFVC has to do with late filing of Form 5500. You are going to have to file a 5330 for each year earnings were not deposited and for the year the earnings were deposited. This will include earnings on earnings as you mentioned.

I can't think of anything that would preclude you from amending the plan before the end of the plan year. Actually I could think of one argument. If you don't have a last day rule, I could see an argument that by changing the definition of compensation mid-year would reduce a participant's basis for the amount of profit sharing contribution you would receive. If you have a last day rule then I think you are okay. If not then you might want to consult an ERISA attorney. This is just an off-the-cuff opinion so hopefully someone else can add something more substantive.