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You raise a lot of issues in your post. From the 401(k) (or other qualified retirement plan), you can always INCLUDE anyone, anywhere. indeed, a U.S. citizen working abroad is not a "statutorily" excludible class of participants implying they clearly are "includible." It would require some clear plan language to include only the ex-pats and not the other employees, but it can be done. Now for the can of worms.... What I just said is from the U.S. perspective, concerning U.S. law. What Chilean law says is another matter. Participation in such an extraterritorial (from Chile's perspective) plan may or may not be permitted, and most likely there would be no Chilean income tax advantages to such participation. In addition, in SOME countries, being covered by a private pension arrangement (DB or DC) may have consequences on your ability to earn benefits under the country of residence equivalent to "Social Security" (if they have one). Best to involve benefits experts with international experience on the team to vet ALL of the issues. As far as medical plans go, that is probably even more difficult (due to single payer systems, local control, and even the ability cover someone really, really out of network). Again, seek expertise in international benefits before proceeding. In some cases, at least on the retirement plan side, a non-qual plan in the US covering the ex-pats may be a viable option....

Good call Pax. I agree. If the DRO is determined to be a QDRO and is filed in a U.S. court, the plan must abide by it's terms. I'm no attorney, but if a DRO comes from a foreign court the plan may be able to ignore it. If it did come from a foreign court, you should check with an attorney. The ironic thing about allowing expatriates to participate in U.S. pension and welfar plan, they have to take the good eith the bad just like us colonists.

I would tend to say a pass through vote should have happened but on these issues I tend to error on the side of caution. As a side note this is one of those odd situations I just never understand. This transaction had to have had lawyers involved. I am just stunned none of them sought out the advice of an ERISA attorney to see if there were any issues they aren't thinking of because they don't know anything about ESOPs and that is an important factor here. Or if there is was an ERISA attorney then it should be a matter of documenting why they though the trustee could do the voting and no pass through voting rights triggered. I would recommend talking to the trustee. If it is an outside trustee I am sure they had this conversation and can document why no pass through vote happened. If it is an inside trustee then it is more likely no such conversation happened. And that would just go to show yet another reason why outside trustees might be worth the cost.

Given the fact that ADP excesses are taxable in the year of distribution now, rather than in the olden days where they might be taxable in the previous year, I don't see why anyone gets uppity about failed ADP tests. To me, with a failed test, you are guaranteeing the economic engines of your firm are putting away, to the penny, the maximum allowed given what the staff is contributing.

Assuming this is the only plan and the only eligible participants you can make a 25% of pay deductible employer contribution. Further assume PY=FY and pay based on PY. For simplicity assume mom made 50K deferred $2K and got $2K match, son made $100K no deferral or match. Eligible pay is $150K, 25% is $37.5K Company has already contributed $2K employer match so it can make a $35.5K profit sharing contribution. Since you said document has pro-rata allocation if company made max deductible 35.5/150 = 23.67% of pay. Son would get 23.6K, mom would get $11.8K (within rounding).

Actual earnings is an acceptable method. If there was a loss, yes you would have to reduce the amount forfeited by the loss. The participant should NEVER be put in a worse position than if the error did not occur.