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The DOL reg allowing for limited scope audits references that timing. 29 CFR 2520.103-5 - Transmittal and certification of information to plan administrator for annual reporting purposes.§ 2520.103-5 Transmittal and certification of information to plan administrator for annual reporting purposes. (a) General. In accordance with section 103(a)(2) of the Act, an insurance carrier or other organization which provides benefits under the plan or holds plan assets, a bank or similar institution which holds plan assets, or a plan sponsor shall transmit and certifty such information as needed by the administrator to file the annual report under section 104(a)(1) of the Act and § 2520.104a-5 or § 2520.104a-6: (1) Within 9 months after the close of the plan year which begins in 1975 or September 30, 1976, whichever is later, and (2) Within 120 days after the close of any plan year which begins after December 31, 1975.

Mutual fund expenses appear to be part of the calculation of investment return. So, when you're selecting a mutual fund as an investment, the expense ratios for that fund would impact the return you'd expect to receive. I cannot see how an Employer could expect to fund these for each participant and have those amounts not to be considered as "Contributions". If I owned a business and had a plan with $2million in my personal account and my employees had a combined $50K, then it would behoove me to create a formula where (as the Employer) I could reimburse the mutual fund expenses to each participant's account and not have them treated as contributions. To heck with Safe Harbor, I'd sell this plan design all day everyday. But, it's never going to happen. Good Luck!

Ah, thanks, now I see that the example in the FAQs is actually correct; I wasn't reading it carefully enough. However, the example in the regs remains on point, and I still do not see how a deemed distribution could/should occur AFTER the end of the cure period.

It is an abomination to have participant directed accounts. It is the expectation of ERISA that the investments be managed by a fiduciary (and its advisers). Since 403(b) plans come from the retail insurance rip-off tradition, it may seem strange that some protection and responsibility have emerged into the light.

Thanks, ETA. It's been so long since I've worked with a plan that allowed after tax that I forgot the procedure for reclassifying the amount as after tax.