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A good example of why, when asked, "How long should we keep plan records?" we always tell them FOREVER!

Yeah, that happened to me, sort of.

My suggestion is to engage an attorney.

Let's put it this way - if you leave things as they are, you report the full amounts on 1099-Rs and report no withholding. The plan failed to withhold, so the participants could demand that the plan pay the withholding, but then the plan could demand they reimburse for the overpayment in the same amount so nothing much happens. I've never heard of any consequences for failure to withhold the 20%. That said, I remember collecting $ from a participant once, or twice, to submit as WH.

I am going to make a different observation from the CPA and TPA points of view. I am simply an employer (myself) of a one-participant 401k plan. I appreciate the knowledge and experience of the members of this forum. It is primarily intended for professionals, but unlike some other professional forums, they are willing to share with everyone. Which I find extremely helpful, because as has been pointed out one-participant 401k plans are 99.9% the same as full blown plans. With that said, I think the TPA viewpoints expressed in this thread are a little over reactive. It seems like the majority of replies here are assuming that we a talking about investment only accounts in conjunction with separate plan documents with no support from the financial institution. These absolutely require a TPA. But... From the OP's posts, I rather think we are talking about standard protype backed plans marketed by mainstream providers. Therefore, I am assuming we are talking about a standard prototype one-participant plans from a financial institution. Even the main stream providers differ in the level of services they provide. Some only act as custodian, leaving the the trustee and administrator choice to the employer. Some extend that to provide trustee services. They vary in the level of record keeping they provide. They all leave the administrator choice to the employer. Sure the principal can specify a third party administrator (and if necessary trustee), but the vast majority of such one-participant plans are operated with the principal acting possibly as trustee, full/partial record keeper, and/or full/partial administrator. We can argue whether that is a good idea or not. Unfortunately, the providers market these plans as nothing more than a SEP IRA with the possibility to increase your contributions, by adding employee deferrals if you haven't otherwise used up that space. The reality is that most people with one-participant 401k plans operate in blissful ignorance. So a knowledgeable CPA can provide useful services in contribution calculations, record keeping, and administrative advice. This is certainly better than what currently happens with the majority of one-participant sponsors being relatively clueless of what lies beneath the surface of their plans. However, my experience and anecdotal evidence leads one to conclude that many CPAs are also clueless in even the most basic issues. As a corollary, there have been a lot of inferences based on facts not in evidence. Given my assumption. 1. Every provider I am familiar with; monitors LRMs revises/restates the plan document when required. All that is required by the administrator is to timely provide amendment certification and complete a new adoption agreement in a timely basis. I have only needed to do this twice in the last dozen years. 2. Yes, controlled groups and affiliated service groups are complex and I would consult a retirement plans professional. However, all that is necessary is to know the basics to know you need assistance when the circumstances arise. 3. Most providers track contributions and earnings by account type. Some will track 402g and 415c limits. 4. Unless I am mistaken I don't believe the issue of in-service distribution prior to 59.5 has anything to do with pre-tax vs. post-tax. My understanding is that all deferrals and their earnings regardless of type and non-vested employer contributions can not be withdrawn prior to 59.5 even if the plan allows in-service distributions. Vested employer (pre-tax) contributions and earnings can be withdrawn prior to 59.5. 5. All one-participant employer contributions are fully vested. 6. There is no anti-discrimination testing. So my opinion is this. If and only if we are talking about standard prototype plans at a major provider, there is no reason why the OP can't provide value add to their clients on these plans. At some level this is not that much different than the services a CPA provides on other areas of tax law. Provided the CPA acquires the necessary knowledge. The plain fact is that plan sponsors are simply not going engage a TPA for a mainstream provider one-participant 401k. At the end of the day are they better off with the assistance of a reasonably knowledgeable CPA or flying solo?

Who owns the corporation? Ask them!

I don't work with FSA plans but what does the FSA document and summary plan description say about eligibility?

refer this to the plan sponsor's attorney, because they must defend the claim that they failed to follow the terms of the QDRO. If the plan sponsor says they paid 100% of the benefit, then they must confront the failure to follow the terms of the court. However, it would be better if they can prove that the non-participant spouse received their payment and a 1099 was issued.

Please tell us why whoever opined on this feels that it is not a 4975©(1)(E) self-dealing PT?

I have felt many times like giving a heavy hit to a heavy hitter broker.

Maybe this helps: http://www.abs125.com/news/

"TPA software sounds interesting, but I'm still not sure it can truly track performance of EE vs ER, or actually if that is necessary." It's borderline insulting when someone comes to a message board focus on 401k PLANS and someone comes in and suggests that the distinguished posters who have been posting for years, and/or have been working exclusively in plan administration for years, somehow don't know what we are talking about. So to make a statement like "I don't believe that a commingled account can be adequately segregated between employer and employee" is basically proving the point to the rest of us who are "in the know" that you are in way over your head. And frankly the biggest mistake you are making is to assume we do not know what we are talking about. To be honest, segregating the account between employee and employer is quite simple. you can allocate the gains to each source pro rata on a spreadsheet once a year. There, I've answered your direct question. But that wasn;t our point. Our point is that when the plan is penalized for never executing its PPA restatement, your client will blame you. Or when they take a distribution of their pre-tax account before attaining age 59.5, they are going to blame you for not telling them it was illegal to do so. Or how about if they contribute $18,000 to the Plan by writing a check to the Plan even though there W-2 wage are only $12,000 that year. Again, your fault. How about they take a loan and send you an amortization schedule with annual installments and you don't tell them the loan is a deemed distribution. I can go on and on about all of the things your client will definitely blame on you. But I've bored myself now. To quote ETA Consulting: Good luck!