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The catch up has to be a deferral contribution, so no.

Seeing this thread late ... I've always thought that a fiduciary that buys products with early termination charges has committed the fiduciary breach of stupidity, unless the plan is tiny and does not have access to decent investment products. I still see these in the non-profit world, especially individual contract sales. But lately, I've seen "market adjustments" on large stable value funds upon plan termination or merger. This is not exactly fiduciary incompetence at work.

I'd be interested to know what the IRS thinks about that kind of language in an election form. Hard to believe that the IRS would be willing to give an employer a free pass to make plan administration errors just by including some "fine print" on an election form, but I can see the logic of it.

Hmmm... That's a good question.... I don't think it would be consistent with the notification criteria before each transaction. I think it would be safer and more consistent to have the election done once a year. How many times is the employer actually funding the NEC, once a year? I would put the onus on them to say until you take the initiative and inform me that you're ready to do this, then I have to assume that you're not. I know this seems to run counter to the 'white glove treatment' we attempt to give to our clients, but you also don't want to set yourself up to fail by not managing realistic expectations. Just some thought, but a good question. Good Luck!

Does Q&A 5 from the DOL's Field Assistance Bulletin 2008-04 help: Q5: Who must be bonded?Every person who “handles funds or other property” of an employee benefit plan within the meaning of 29 C.F.R. § 2580.412-6 (i.e., a plan official) is required to be bonded unless covered under one of the exemptions in section 412 for certain banks, insurance companies, and registered brokers and dealers, or by one of the regulatory exemptions granted by the Department in its regulations. [see Exemptions From The Bonding Requirements, Q12 through Q15, Funds Or Other Property, Q17, and Handling Funds Or Other Property, Q18 through Q21.] Plan officials will usually include the plan administrator and those officers and employees of the plan or plan sponsor who handle plan funds by virtue of their duties relating to the receipt, safekeeping and disbursement of funds. Plan officials may also include other persons, such as service providers, whose duties and functions involve access to plan funds or decision-making authority that can give rise to a risk of loss through fraud or dishonesty. Where a plan administrator, service provider, or other plan official is an entity, such as a corporation or association, ERISA’s bonding requirements apply to the natural persons who perform “handling” functions on behalf of the entity. See 29 C.F.R. § 2550.412-1©, § 2580.412-3 and § 2580.412-6.

Unusual but don't see where it would be discriminatory. I have seen plans that limit hardships to no more than 1 per calendar year but never seen one that puts a life time cap on it. I would think the biggest issue might be tracking such a cap, especially over time if the plan moves through multiple record keepers and you could easily inadvertantly fail to follow the terms of the plan by accidentially granting a 3rd hardship.