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Must be the 7/15 deadlines, but you are right. The 1/2 adjustment is not changed because a portion of the annual additions are employer contributions. Don't have time to re-do the calcs.

Yes, correction is needed even if the participant elects to not defer going forward. You are close. The sections you need in Rev. Proc. 2016-51 are Appendix A.05 (9)(b) and Appendix B 2.02(1)(a)(ii). When you put them together, I think you will find that the pre-approved correction method is for the employer to deposit a QNEC of 25% of the applicable missed deferral rate times the participant's compensation for the portion of the year he was excluded, plus lost income and 100% of the missed match for the portion of the year he was excluded based on the applicable missed deferral rate. Note that a notice to the participant is one of the requirements to be eligible for the 25% rate. You don't say if the plan is safe harbor or not. If it is, the applicable missed deferral rate will be based on the SH formula instead of the NHCE average deferral rate. If you are looking for a summary that is easier to read than the Rev. Proc., try this page on the IRS website: https://www.irs.gov/retirement-plans/401k-plan-fix-it-guide-eligible-employees-were-not-given-the-opportunity-to-make-an-elective-deferral-election-excluding-eligible-employees The conditions for the reduced 25% rate are listed in the Corrective Action section of the page. Note, they add a requirement that the employee be employed at the time of the correction, which I don't see specifically mentioned in the Rev. Proc.

My question would be whether dividends on employer stock owned by a 401(k) plan (or on any other stock for that matter) is permitted to be paid out in cash in lieu of reinvestment. Does the client have any legal advice saying they could do things this way? It seems to me that the dividends should automatically be put into the 401(k) accounts, to be distributed at such time and in such a manner as called for by the plan's distribution rules.

There is a difference between walking into a bank as you suggest, and going to an employer requesting information about a benefit: *E*R*I*S*A* There is a "requirement" to retain records for as long as necessary to calculate and pay all benefits due - regardless of how long that may be, or how many corporate transactions (M&A, spin-offs, etc.) may have taken place...I would suggest that plan sponsors also maintain all records showing that all benefits that had been paid, were actually paid. "Purge" is a a word and action that should be "purged" from ERISA plan operations.

The people who "believe" this are those who know just enough about ERISA and plan administration to be dangerous, but have not been trained properly.

I'm not sure why some people believe changing service providers is the termination of a "plan" and setting up a new one - which is what they did here. The plan is plan 001. Using 002 is probably incorrect. Labeling the change as an "asset out" and an "asset in" combination was wrong. I'd amend and go forth with 001 and the *only* plan....