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Can I assume the plan covers all NHCEs or is that a bad assumption? I am not sure if this qualifies for SCP but I believe it would assuming a large majority of NHCEs are already covered and you communicate to HCEs that they are are now covered. The reason I feel this may qualify for SCP and not require VCP is because you are generally allowed to discriminate with respect to 1 HCE or group of HCEs over another without IRS issues. I would say that VCP would likely be required if there are any NHCEs similarly situated with the HCEs who were allowed in who have been excluded from the plan and you would like have to bring them in probably with a QNEC. But my analysis of the situation here could be off.

Yes, Austin, I've done ALL of those things - and I ACCEPT the consequences of that behavior. I don't moan and groan about how those things should not be "illegal" - there are reasons why they are (and I'm glad they are because if they weren't, there would be chaos and injury). Same is true for not amending a plan..... It happens - but there are consequences. If there weren't, there would be chaos on injury. BTW, the lack of sophistication of the plan sponsor isn't really an excuse. They are sufficiently sophisticated to be an employer and to sponsor a plan. Keeping it up to date ranks right down there with making sure payroll is on-time (and if it isn't, there is a DOL consequence) and that taxes withheld are deposited on-time (and if it isn't, there is an IRS consequence). We tend to get into the belief that businesses can't follow rules and woe is them for having to comply (which includes labor laws, OSHA, environmental laws, tax laws, zoning laws, insurance requirements and lots of other things that we actually ALL appreciate because they protect us from abuse at the hands of those who think they can do anything). But by and large they do comply, and if they can't they shouldn't be in business - or at least shouldn't be sponsoring a plan.

Key point is that it is never mandatory to escheat any funds to the state from the plan.

Perfection is a tough standard, but it must be a goal, nonetheless. There are ways to fix late amenders - and the IRS even has offered a discount for those who missed the most recent deadline. I guess I would question whether John Doe Manufacturing with 10 employees had the right service provider/advisors in place in establishing and maintaining a plan and whether they were paying attention - which portends other issues that may be significant. I work for a bundled shop - and even though we started the PPA restatement COMMUNICATIONS to our clients 18 months ago, and hit them up with many communications including phone calls and in-person visits, we still had 56 who never responded to the request for information to complete the restatement, and 110 who never returned signed documents. Being "asleep at the wheel" is not a fiduciary best practice.....

I would think that if they put a 403(b) into the non-profit, and a 401(k) into the for profit there would not be any concerns even if the are a CG. And I think they are a CG.

First, Austin, you have way, way too much time on your hands - to be able to look up the statute of limitations for those crimes.... Second, while I agree with you *in theory* - as a practical matter the errors that can occur in a plan can compound profoundly over an extended period of time (and indeed, may not even be detectible until long after and individual separates from service and starts taking benefits). I think Congress and the IRS have implemented this lack of a "statute of limitation" because of the lasting effects of problems that may arise in the future as a result. indeed, many of the "statutes" of limitations for retirement plans and for other types of things (lawyer malpractice, for one), don't even start to run until there is a cessation of the relationship (participant actually takes benefits out of the plan, or the relationship between a lawyer and client is terminated). I like to tell people there is no such thing as a free lunch in retirement plans. the tax advantage of qualified plans are HUUUUUUGGGGGGEEEEEEE - and that tax advantage comes with strings attached - you have to play by the rules - ALL of the rules.