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I think the OP recognizes it all belongs to the plan, but by the same token presumably the terms of the plan permit it to pay operating expenses, which would include the audit fees. However, you're still left with the "loan" and PT issue which I mentioned.

You said "they received", who is they? The Employer, the Plan or the Trust?

Huh?

If you think you are going to set up the plan so it will not be an ERISA plan, you need to do so advisedly. Notwithstanding the prevarications of the Department of Labor about its positions about what triggers ERISA, I think it is rare or impossible to have a non-ERISA 403(b) plan unless it is exempt under the government or church exemptions.

I will also say that there are probably more of these that are "found" in files, properly dated, than anything else I can think of. I would never tell a client to do this, nor do I advocate it, but I must say that in a business that is rife with ridiculous requirements, requiring a signed election prior to the time income is known is mentally arthritic. Someday, when I'm elected dictator, this is the type of foolishness that the IRS will be prohibited from enforcing. (As dictator, I could abolish the IRS, but I'll need someone to collect my income for me!!)

I have no illusions about the company I keep. I did not comment on the substance of the product itself. I offered only literary criticism. It is credit insurance. Not my interest or expertise.