Leaderboard

What you describe is feasible if everything is designed and documented correctly. However, it can get uncomfortable, such as the circumstnaces you describe when some serious thinking needs to be done about managing the investment (e.g. how long to wait to foreclose or whether or not it is worth it to spend enforcement money based on prospects of recovery. Also, a very watchful eye is needed with respect to prohibited transactions. Then there is the valaution issue. This is not for the unshophisticated or the timid.

Why not just tell Fidelity to do a rollover from the "IRA" back to the plan. Fidelity will issue a 1099-R for this, and the plan does not file a 5498, so this will eventually result in an IRS letter. I got one myself when I rolled from my IRA to my plan a few years ago. But a simple response that it was a rollover from the IRA to a qualified plan took care of it. Yes, it is not really a rollover, as it was never really a distribution. But it fixes the error and it is explainable, especially if the documentation for the original IDA request is clear that no distribution was ever requested. Life's too short to fight Fidelity.

Why not just amend the Plan to exclude residents of Puerto Rico?

as a result, for coverage, those in one group received a match but no nonelective and would be treated as includable and not benefiting etc.

What does the plan's loan policy say?

There is a difference between how/when the match is determined and when the match is deposited. The match determination should be specified in the document, The deposit timing may or may not be specified in the document. Our VS document gives the employer the discretion to decide when the deposits are made. It also says that if the employer deposits the match on a more frequent basis than is used to determine the match, a true-up is required. If the document does say that the SH match must be deposited after the end of the plan year, you can't amend that mid-year. I don't remember ever seeing a plan specify that an annually determined match must be deposited after the end of the year.

I don't think Lou S. was emphatic enough. This is a very very very incorrect statement. Also, make sure the plan is not top-heavy before you do away with the safe harbor. (I presume you have safe harbor match already). IF the owners have been socking away the max for 15 years and you have high turnover among lower paid employees, I could easily see where your plan could be top-heavy.