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Presumably, the distribution fee covers the TPA and bank costs for processing a distribution. The size of the distribution has little bearing on the amount of record keeping and paperwork (the costs) involved in the distribution, especially for a distribution to close an account, regardless of who gets the distribution. If the fee is reasonable for the work involved, it's reasonable for any distribution amount. I would think the record keeping for processing forfeitures would increase the TPA's work (costs). A plan could try to negotiate that the fee for closing an account with a small balance will be a stated fraction of the balance, or that the TPA or bank would waive their fee in certain cases. Or the plan sponsor can pay the distribution fee, rather than taking it out of participant's accounts. But I don't expect our TPA or bank to eat all of their costs for processing a distribution. (I am not a TPA or a bank.)

Happens all the time. The SEP rules are in 408 and right on the 5305-SEP form itself, but they are either not read or ignored. IRA custodians such as fund companies, brokerage firms, etc. don't "administer" SEPs, they simply hold the IRA accounts, it is up to the employer to administer the plan, and they are frequently administered just as this owner suggests. I know IRS knows about it, I've told them myself. but these things fly beneath their radar. They'd rather beat up an employer who forgot to sign a minor interim amendment to a 401(k) that had no impact on plan coverage or contributions, rather than track down the rampant abuse in the SEP world that results in a federal tax expenditure for the owner's contribution and no retirement benefits at all to other employees. <rant/off>

Some plans provide for the amount to be forfeited rather than appear to pay a TPA for a service that is not rendered. I would prefer to defend a forfeiture that is used for the benefit of participants in some way.

If you believe that the order provides that the benefit will commence in 2003 and the plan is bound by those specifics, then the plan could take a position that, because of circumstances not of the plan's making, the order provides for something that the plan cannot do, and therefore the order is not qualified. That puts the burden on the individuals to figure out what should be done in today's environment and get a new order that works. However, be prepared to respond to an interpretation that requires the plan to take a more practical view of what it could do based on the past date, such as pay the sum of the missed $85 payments (with or with some interest factor?) and then stay on track with installments. All of the payments would reduce the participant's benefit because the participant was equally culpable in the delay that reates the need for some workaround solution. The participant can always challenge and offer a more fair and viable solution (ha!).

The reason for filing of separate Sch C's is per Rev Rul 81-90 and Code Section 6011(a). The instructions for Sch C say to file separate businesses on separate schedules. A primary reason is the prevention of tax fraud. A sole proprietorship is not a separate legal entity from its owner. Even if the owner has 5 businesses, since they are not separate from the owner then they are not separate from each other. The instructions for Form SS-4 explicitly state that a person should use only one EIN in operating multiple businesses as a sole proprietor. In my opinion, the sole prop is a single employer for all 5 businesses.