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Key point is that it is impossible for the AP to be paid anything and for the money to also remain in the plan. You know, can't have your cake and eat it too, right?

Thank you both for your input and for the tip about the ASPPA exam. That will be one question that I will not get wrong!!

We're going to do amendments regardless - for any affected client who wants to expand the hardship criteria. We take the position that the document is gospel - and needs to reflect actual operation - and that the relief given, if taken, should be part of the permanent plan records. For us, that means doing an amendment.

I've always done it on the excess contributions (not the gains & losses). This was always a question the popped up on all the ASPPA Exams as well; and the answer has always been on the contributions alone. I don't recall it ever changing. Plus, I've never seen anything about an adjustment for gains & losses in Section 4979 of the Code. Typically, if there was such an adjustment, it would state it there. In addition to that, I don't see any instruction on the Form 5330 (that is actually used to pay the excise tax) that would require you calculate the amount on anything other than the 'contributions'. Good Luck!

Keep in mind that while the adoption agreement is silent, it may be in the base plan document.

Nope. They provide you with the means to maintain your own document. There is a big difference. They do not make sure the document is properly filled out, or that you make timely amendments, or that you keep all necessary documents in a safe place, etc. That is all on you. Trust me, the people who frequent these boards have taken many Vanguard and Fidelity plans through correction programs for this very reason.

Actuarial vendor performs the annual actuarial valuation for a DB plan, and delivers the report to the sponsoring employer (i.e., the PA). Actuarial vendor then sends its invoice for services rendered. The plan provisions have always permitted the plan to pay reasonable expenses if not paid by the sponsor. "The trust fund shall be used for the exclusive benefit of the participants and their beneficiaries and to pay administrative expenses of the plan and trust to the extent not paid by the Hospital." In prior years, the sponsor has elected to have the plan pay some expenses, including fees from the actuary, but not necessarily the same each year. In some years the plan has paid expense X, Y, and Z, while in other years the plan has paid expense X and Y. For the current invoice, the sponsor does not pay promptly, nor is the invoice paid by the plan. A few months later, the sponsor declares chapter 11 bankruptcy. The sponsor also files for a PBGC distress termination (without involvement of this actuary). Sponsor refuses to pay the actuary's invoice, and refuses to send the invoice to the plan trustee for payment. Bankruptcy attorney says, “get in line, like everyone else”. Research includes ERISA sections 403 and 404, and DOL Advisory Opinion 2001-01A, Distress Termination instructions. Nothing appears to restrict the payment of reasonable administrative expenses in the event of bankruptcy. My view is that plan provisions require the sponsor to direct payment from the trust since the sponsor has not made the payment, but I’m willing to consider other viewpoints. Any comments or experience that you are willing to share?