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It sounds like you are correcting missed Employer Discretionary Contributions. If so, these aren't QNECs. To me they are simply a correction. I would subject the corrected amounts to the vesting schedule. The point of any correction method is to get a person back to where they are no better or worse off had the mistake not been made. To give them more vesting could make them better off then if the mistake wasn't made. What I just described is how we do it any time we do this type of correction and when done via VCP it has always been blessed by the IRS. As for VCP or SCP it depends on how many people and how many years. I forget the exact words the SCP rules use but the error can't be significant and frequent. So if it a large group of people or over many years I would lean towards a VCP. In the end I would get an ERISA attorney's opinion unless it was just 1 or 2 people over 1 or 2 years.

CuseFan. Interesting point. But, on the other hand, the calculated IRA RMDs were "overstated" because the IRA balance had not been reduced from year to year by RMDs.

Here's some other potential issues: IRS may still insist on those missed RMDs being taken from the IRA even if they waive the excise taxes. If they don't require that correction and accept the payments from PS as IRA RMDs, the question is whether the PS distributions were enough to cover both. That is, did a prior year IRA RMD amount paid from PS reduce the PS balance used to determine a subsequent year PS RMD?

Which instructions? I just pulled this from 2016 5500-EZ instructions. Who Does Not Have To File Form 5500-EZ You do not have to file Form 5500-EZ for the 2016 plan year for a one-participant plan if the total of the plan's assets and the assets of all other one-participant plans maintained by the employer at the end of the 2016 plan year does not exceed $250,000, unless 2016 is the final plan year of the plan. For more information on final plan years, see Final Return later. Clearly you have to file for the CBP. And if these are not owner-only plans it doesn't matter what the assets are, you have a filing requirement.

Perhaps it is good news that the practitioner did not make an error in making the participant take a taxable distribution from the plan?