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I have added a new, optional way to see what's new on the message boards. You might prefer it because it's simple and straightforward. It's the new "Portal" tab next to the "Activity" tab and the "Browse" tab (at the top of every page). Just click the Portal tab. The Portal tab generates a list of all topics recently added to all message boards, with a snippet of the first five lines of the message that started each topic. The list includes links to the full version of each topic if you'd like to read the rest of the initial message and any reply messages. (Of course, the full version of each topic includes a box at the bottom where you can post your own reply message.) Hope the Portal view is useful to you!

How could the proceeds of the first distribution not have been used for the intended purpose? Sounds like bad administrative practices at best. Now the plan administrator is required to interpret and evaluate the circumstances. A conclusion would require a lot more than reading these posts, but one conclusion could be that the distribution was issued for those expenses, so those expenses cannot serve to justify another distribution. And the distribution practices need attention to comport better with the plan provisions.

One thing to check is if they have a POP (premium only plan - a simplified 125 plan that is very common with small businesses ) that allows for those health insurance premiums to be pre-tax without having a full 125 plan. That's about the only way I can think of outside of full 125 that would allow the premiums to be pre-tax deductions. It is possible they aren't calling it a Section 125 plan or say they are sponsoring a "125 plan" because they don't have other choices such as FSA attached, but it is still a 125.

If the 25% is paid with after tax money, you do not add it back into the W-2 taxable amount, because it wasn't subtracted from total comp in the first place. Take total comp and subtract 401(k). Does this leave the W-2 taxable amount?

I've seen a POA a few times. In every case, the PA got its own confirmation/legal opinion that a POA was valid or not. (This may have included other practicalities, such as other known evidence about a participant's disability, etc.) In all cases, the PA was clear that lack of authenticity of the POA would mean "don't do anything", except that the plan's appeal process may be triggered by the submission of a (proposed) POA. If the POA was determined to be valid, the same legal advisor would describe whether the POA has limitation(s) within the plan context. (IMHO, this last part is essential, and is evidence that the legal advisor reviewing the POA should be an ERISA attorney.) As the actuary, I give my opinion only when requested by the PA, but always defer to opinion of the legal advisor.

This question has come up a few times in one of my monthly among-practitioners groups. There, a consensus view was that a fiduciary might have some duty to consider whether allowing a distribution before everyone gets the final distribution could result in the earlier-paid participant not bearing her fair share of the plan's wind-up expenses. (All of our discussions involved situations in which expenses are paid from plan assets, and unallocated amounts were insufficient to meet the plan's expenses.)