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What, pray tell, is the "mistake" to which you refer? Please don't tell me that it is along the lines of: "Well, if I was told about the consequences I wouldn't have deferred." While that may be a mistake it isn't something the Code or regulations allow one to "undo". Unless, of course, you are volunteering to assist with an EPCRS filing that incorporates your practical solution.

I may or may not have liked this post... We will never know...

...change the settings so that the old system of displaying the user names for those who "like" a post was in effect rather than the new system which just identifies the number of likes.

It seems that some of the large 401(k) providers are compartmentalized to the point that there are a number of issues that don't get addressed until the plan sponsor has very few options. Nobody can answer your questions without seeing a copy of the plan document that you signed. However, with that said the answers are: 1) It is probably not everybody, it is not even necessarily employees "eligible to the plan (6 months of service and over 21 years old) as of 12/31/2015" because not only do they need to satisfy the eligibility criteria they need to also satisfy the entry date criteria. Nobody can definitively answer your question without seeing a copy of the plan document that you signed. 2) Typically, top-heavy minimum contributions are not required for participants who have terminated before the end of the year. Nobody can definitively answer your question without seeing a copy of the plan document that you signed. 3) Typically, if the highest deferral rate for any key employee is 1% then the top-heavy minimum is also reduced to 1% from 3%. Nobody can definitively answer your question without seeing a copy of the plan document that you signed. 4) Typically, the top-heavy minimum allocation will be subject to a six year graded vesting schedule (0-20-40-60-80-100). Nobody can definitively answer your question without seeing a copy of the plan document that you signed. See a pattern? Straight out of the department of redundancy department: Nobody can definitively answer your questions without seeing a copy of the plan document that you signed. I would not "lean on" any service provider to commit fraud. Unless somebody thinks they can get the IRS to allow you and your partner's deferrals to be retroactively re-characterized, I would stay away from any manner of pretense. You need to hire a competent service provider to review the actual plan document and the actual history of the plan. Frankly, the first thing I'd take a look at is that 60.7% figure and make doubly sure that is being calculated correctly. If that number falls to less than 60% it renders the rest of this discussion moot. And while it is too late to do much for 2016, until this issue gets resolved you should take steps to eliminate any deferrals by any key employee for 2017 (probably just you and your partner). Good luck.

In addition to considering the other suggestions, the plan's administrator might want its lawyer's advice about whether an interpleader (or some other court proceeding) is or is not appropriate. ERISA grants a Federal judge discretion concerning attorneys' fees and costs. If a judge finds there was no real ambiguity that needed the court's decision, the judge might order the administrator that initiated the interpleader to pay or reimburse another party's fees and costs.

Don't forget to search your files for a QDRO (draft or otherwise). This is easily overlooked in an employer with many locations and/or a non-centralized HR function.

If an employer wants to reform its plan document without a VCP filing, claiming that it was a scriviner's error, then I suggest the employer should consult with its legal counsel.