Plan Defects - Compensation

[Ervin Barham]

Plan Document excludes moving expenses and other fringe benefits from definition of compensation (satifies 414s). For the 2000 plan year, Employer includes those items in calculating the safe harbor match, but did not allow deferrals on those items. Thus, the Employer has made too much of a match for 6 ee's.

Plan also failed to follow eligibility in document and allowed all ee's in plan to defer.

Possible solutions include:

1. VCP (expensive?) to amend plan for 1 year to include fringe in comp and amend retroactively for eligibility.

2. forfeiting excess match and using to reduce future contributions and amend plan for eligibility under EPCRS.

Any comments on either of those solutions or any that I may have missed? I've looked at the notices, but nothing seems to address the compensation issue. The eligibility problem (by itself) is quite clear on the solution.

Thanks.

Ervin Barham