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Only the client can tell you if it's W2. What entity type is the company? I would believe an owner would be performing some sort of services for the company. Unless it's a partnership and all he took was draws and only had an investment relationship.

How is this loan not deemed from inception? Isn't the repayment period beyond 5 years?

Yes. She would get a 2017 SH contribution. I guess the amount would depend on whether the plan uses participation comp or full year comp. Yes. For 5500 purposes she is a participant at the end of the year because she has a balance. However, she is not an active participant for 5500 purposes since she is now ineligible. Yes. She is an ineligible participant with no balance at the end of the year. She is not a participant for 5500 purposes.

the document should contain language such as (b) Refund of Excess Elective Deferrals. In the event that Elective Deferrals under this Plan when added to a Participant's other elective deferrals under any other plan or arrangement (whether or not maintained by the Employer) exceed the limit described in the preceding Subsection, the Plan Administrator shall distribute, by April 15 of the following calendar year, the excess amount of Elective Deferrals plus income thereon. If it is an HCE the excess is included in ADP testing, if NHCE it is not included. if there is a related match on the excess it would be forfeited. gains adjustment, etc are treated the same as you would for an ADP failures. from the Coverage/nondiscrimination answer book 12:14 Excess deferrals should be distributed with earnings to the participant no later than the April 15 following the calendar year in which they were made. The excess deferral is taxed in the year it was deferred, and the earnings are taxed in the year of distribution. Therefore, two 1099-R forms are needed: one reports the excess deferral with a reporting code “P” indicating the distribution is taxable in the prior year; the other reports the earnings (losses), with a reporting code “8” indicating the distribution is taxable in the current year. ............. The IRS looks at the W-2 so it knows the excess deferral exists so, famous last words, when looking at the W-2 it will adjust things even if the individual doesn't indicate the excess. What is 'confusing' to the individual is the 1099 won't come until the following year even though they need to indicate the amount on this years form, hence the code P

I don't believe it was ever acceptable. It was more you could get away with it becasue it took them so long before electronic filing to realize it was missing. What I can tell you is I have a couple clients that do this every year. I just a few weeks ago filed a 12/31/2016 5500 with the report. We filed with a note back last October. So far they have never been fined for doing it. But I always tell them they are at risk of it being ruled as incomplete.