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I don't work with things like hardship withdrawals and I don't know the rules, but it seems to me that the regulations MUST allow (if not require!) you to refuse to give a hardship withdrawal for specific medical expenses for which a hardship withdrawal has already been given. That the participant failed to use those funds for the purpose for which they were paid is the participant's problem, and should not be yours.

Aren't they already late with the TH contribution at this point? Doesn't it need to be in by 12 months after the year end? And yes I would think at this point you need the 3% for 2015 & 2016, the only question that remains is do you do a VCP filing.

I think you’ve spotted an issue. Beyond the definitely-determinable issue, consider also whether a discretion of the kind you describe could lead to related problems under civil-rights law, employment law, labor-relations law, or a law special to government employment, such as a civil-service or merit-protection law.

Not from my viewpoint. I've seen plans like this before. Everyone is 100% vested, and it just goes merrily along. Sometimes they actually intend to start contributing again if business improves, sometimes they want the added shield from a lawsuit judgment, etc., etc. These are sometimes small/family plan situations, so if it goes on a long time, might be worth consideration of having a successor trustee in place, (if there isn't already) depending upon age and/or health of the owner.

I don't see the monsters under the bed that others are seeing. Assuming the investment advisors have a long term and successful track record, the fact that the CEO has gotten to know them well is what I would expect. How could it be any other way? Different managers have different methodologies and just because investments are primarily equity based doesn't mean that they don't employ sophisticated portfolio risk aversion techniques. I just don't see the problem with the CEO holding his ground.

For example: I *HAVE* a client that takes a very paternal approach to all things benefit related. They have less than 20 eployees and I can count on one hand the pre-retirement terminees in the last 10 years. The company has been around for over 40 years and the plan for over 35. They started out, as you would imagine, with balance forward because what else was there, other than big hair, in the early 80's? They engaged a classic investment management firm that publishes quarterly "state of the world" investment philosphy newsletters and issues quarterly statements to the Trustee with everything one would expect of a professional investment management firm. The client is a family run business and the founder's progeny have steered the company as well and as profitably as the prior, now long since retired, generation did. The average account balance for the non-owners is north of 1/4 million. The company distills the information received from the investment advisors quarterly and lets the employees know how things are going (in good times and bad... 2008 is a distant [and bad] memory). The company benchmarks fees no less frequently than every three years and has long since reduced administrative fees to less than 10 basis points (I kid you not). The investment management firm meets frequently with the Trustees. Every once in a while somebody mentions the potential advantages of participant direction but the employees will have none of it. The company certainly doesn't need a participant directed qualified plan to attract talent, it does so quite well without it. The Trustees (who are also the owners of the company) feel that they are addressing their fiduciary responsibilities professionally and responsibly and that they owe their employees every bit of effort they put into comunicating and running the plan. In short, I think that balance forward plans are most successful when there is long term stability - and that doesn't happen very often any more so the market has turned somewhat of a deaf ear to such client's needs. Did I mention this is a 401(k)? And that it would pass the ADP test each year with plenty of room to spare (even though the design is, as you would guess, a safe-harbor). I think the real losers in participant directed plans are the participants. And I think this has come about because the true professionals in the investment management world have found it more profitable to attract non-ERISA monies and have abandoned ERISA plans for the most part. But I, too, am surprised at the statistics because I would expect plans that do not offer participant direction to be, at most, in the single digits.

If we're talking about a plan that is large or complex enough to have it's own staff, I cannot imagine any tolerance for lazy hardship reviews--It better be perfect every time. In that scenario, I see the recordkeeper's job as cutting a check & that's it.

You like badly written regulations?