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I remember a long time ago saying jokingly to someone at IRS, "You'll be horrified to discover that some of our governmental plans don't comply with all of the IRS qualification requirements." Her disbelieving response was, "You mean some of them do?"

The problem is that the IRS is not consistent in how they enforce the CE requirements. Circular 230 § 10.6 (e) (2) (i) states that you need 72 hours including 6 hours of ethics per enrollment cycle 230 § 10.6 (e) (2) (ii) states that you need a minimum of 16 hours of continuing education credit, including two hours of ethics or professional conduct, during each enrollment year of an enrollment cycle. The requirement is clearly there. Whether they follow the rules is a different question. Unless you have it in writing that you can ignore § 10.6 (e) (2) (ii), I would be very careful. What happens if you get another person reviewing your renewal? I know people who have gotten renewals when they had less than 72 hours in a cycle or lacked the ethics credits. They were told to do an additional credit in their next cycle. I also know people who have had to fight tooth and nail to get their renewals because their paperwork never made it to the appropriate office even though they had proof of delivery. Follow Circular 230 and you are always safe. It isn't worth risking a credential that you can no longer test for.

From Form 8554 (ERPA Renewal): • You must complete 72 hours of Continuing Professional Education (ERPA–CPE) over the three-year enrollment cycle to remain active. This must include at least 2 hours of Ethics CPE each year. • Exception: If this is your first renewal, you have to complete 2 hours of CPE for each month you were enrolled, including 2 hours of Ethics each year. If you have re-taken and passed the ERPA Special Enrollment Examination (ERPA-SEE) since your last renewal, you are only required to take 16 hours of CPE, including 2 hours of Ethics, during the last year of your current enrollment cycle. The Form seems to confirm what the IRS agent said, although I agree with RBG with respect to following C230. On another note, what November conference provides over 70 hours of ERPA specific CPE? Heck, I would automatically renew you on the spot for sitting through that!

if it hasn't been done before and it turns out the distribution is for an HCE, and therefore he is going to get the advantage of the great gains for this 2017 year based on his 12/31/2016 it smells worse than the refrigerator after a weeks power outage. yes, interim vals are done from time to time, e.g. in the case of an HCE with a large balance and the plan lost big $ then you were pretty much forced to do so - back when the stock market collapsed a few years ago this was done on plans - there were situations in which you didn't have enough to even pay out the balance as of the end of the prior year. .................... If the doc says assets are valued once a year it also takes an amendment for the purpose of running the gains/loss.

I have heard of that being done, but it is the exception rather than the rule for balance forward plans. Typically the plan document will dictate what options are available for things like that.

Why, when I see this, do I think that this is probably the most spectacularly inappropriate way to measure the impact of the proposed legislation? Nothing that looks at the impact of the legislation on individual savings for those who are not investment advisors versus the impact of the legislation on individual savings for those who are investment advisors?

I wouldn't amend, just move it to the line the auditor wants. As a side note, I have one auditor from a large CPA firm that does tons of audits, who insists that the correct line item on the Sch H is "Mutual Funds" rather than "PSA" for a platform type plan. They claim that because then underlying assets in the PSAs are mutual funds, the correct line item is mutual funds rather than PSAs. The first year they audited, we shifted the assets from PSA to mutual funds. All my other similar plans with other auditors use the line for PSA.

Agreed on all of this and I believe the reasoning in the original post is solid. This looks (to me) like a failure to implement a deferral election, not a permissible withdrawal situation. It sounds like there's a breakdown in communication between the vendor and the sponsor's payroll, and while you're fixing this I would definitely pull an opt-out report from the vendor to make sure nobody else who opted out is actually still deferring.

But that's if you didn't make an election. Here, the participant did make an election - employer just didn't follow it. I'd say you refund it, plus earnings if there were any. Any match made, plus earnings if any, should be forfeited. I don't think that the employee failure to look at pay stubs is material here. I can easily see how this could happen - direct deposit of pay, one spouse keeps the checkbook up to date, other spouse doesn't even mention that elected no deferrals, etc., etc., etc.... - some people simply don't communicate. Maybe that's a good thing - I've heard that communication is one of the main causes of divorce.

Occasionally?