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Just my two cents here. "Plan design" is not something you can sit down and learn "a to z." Plans are designed based on client needs and their (perceived) needs of their employees, consistent with legal and cost constraints. It isn't "book learning" at all. It takes a keen analytical mind and the ability to separate client "wants" from client "needs" consistent with the law - and that takes experience in the industry. I would say that typically plans are 95% the same as every other plan, but it's the 5% that is truly crucial. I would also add that based on a variety of factors, plan design includes proposing multiple plan (DC, DB, cash balance, a variety of non-qualified "Top Hat" plans) safe harbor vs. non-safe harbor, cross tested, etc. that cause the permutations (despite the legal and regulatory constraints) to be enormous. I agree with hr for me - latch on to an exist TPA and learn, and possibly buy them out (or possibly offer certain services to them so they can "out source" overflow while you learn). Better yet - hire someone with experience to get you started while you learn.

Just an observation: I am a CPA and every CPA firm I know that got into the TPA business is out of it now. They found it didn't work for them. They found they couldn't make the money they wanted or needed to justify it. You need specialist to do the work. It is easy to do an EO if you aren't a specialist. Obviously some people make it work as this forum is full of 401(k) TPA people but it was trendy about 10 or 15 years ago for a CPA firm to go into the TPA business and they all seem to have left it that I knew personally.

The fact that the hardship distribution "reimburses" an expense that has been paid does not necessarily mean that the hardship is no longer there or that the participant should not be able to utilize a plan feature. For example, I have 2,000 disposable income until my next paycheck, of which I need at least $1,500 to cover expenses. I end up with a medical emergency and I need to pay the hospital $1,000. Knowing that my 401(k) plan allows for hardship distributions, I pay the $1,000 from my checking account and apply for the hardship to "reimburse" myself for the expense. The medical bill has been paid, but without the hardship distribution, I can no longer cover my expenses. Do I not have a hardship because I used the money in my checking account to pay for the bill? I asked a similar question a few years back at the ASPPA annual IRS Q&A. The issue was that most of the hospitals in my area are requiring payment for services before you leave the hospital instead of the old approach of a payment plan. If you cannot pay your bill, they will set you up with something like MedMax, Care Credit, or some other type of financing. In the end, the hospital is paid in full, and the patient walks out with an open line of credit that will take you to court and destroy your credit if payments are not made. Long story short, we started seeing a lot of hardship applications to pay off these medical credit lines. The question then becomes is it still a hardship if the bill has been paid through other means, in this case a medical credit line or a credit card. The answer from the both the ASPPA panel and the IRS was that what triggered the eligibility for a hardship was the medical expense. Whether the debt was already paid doesn't matter because it is the expense that is the hardship. So, since costs related to the purchase of a primary residence is an eligible hardship under the safe harbor definition, does it matter that those costs first came out of the participants checking account if those costs could have been paid with the hardship distribution? It will probably depend on the facts and circumstances, but I would not disqualify a participant just because they are looking to recover a payment they already made.

100% this. If you are going to get into this space, you will need to hire people with experience. What is the biggest motivator here? A new revenue stream or offering more services to your clients because that's what the competition does? If you want to offer more services to your clients to keep up with competition, you can always partner with an existing TPA to do the work for you. We have this arrangement with several CPA firms, as do most of my TPA competitors. If you just want to add a new revenue stream, this isn't an area you can just dip your toes in. If you are going to do it, you will need to hire experienced staff who understands the ins and outs of design, testing, etc. There are too many traps to fall into while learning to not have that safety net of experienced people backing you up.

Can you do what you are asking to do? Yes. Can you be successful at it? Less likely. Most CPA firms that do TPA work in house with people that have never worked in a TPA firm are doing a multitude of things wrong. It seems to be an obvious niche, but, for some reason, a great many CPAs just can't understand the way the 400 section of the code works. And I worked for on of the 30 largest CPA firms in the nation for 12+ years. So, I recommend buying a TPA firm or hiring an experienced professional from a TPA firm to start your practice.

Not dispositive to the original question, just a reminder that pronouns sometimes need clarity (ie, "she" and "her"): fiancée = a woman engaged to be married. fiancé = a man engaged to be married.

No. Per the document, you have committed to making a SH contribution in lieu of ADP testing. Not making the SH contribution is an operational failure.

I don't think so. document requires a 3% safe harbor, and plan is still safe harbor even if contribution is late, as far as I understand the regs.