Leaderboard

I think this is correct and how the IRS judges it. Though I think you could probably make an argument that is the funds were liquidated on the 15th and check issues on the 16th that the refund was made by the 15th. I don't know how an IRS auditor would rule on it. That said in this particular case the refund was late since it wasn't even initiated at the investment house until 3/16 per the OP. And it looks like the plan sponsor gets to file a 5330 and pay the 10% excise tax.

You are required to include this in the Average Benefits test for a4 testing. It's the nondiscriminatory classification portion of the AB Test that needs to be passed by treating the other excluded participants as not benefiting. The devil her is in the details. IF each plan passes at 70% coverage ratio, then you're all good. But if below 70% and there is no reasonable business classification for the exclusions, then you're out for Average Benefits FOR COVERAGE. So that's why some have asked "on what basis are you excluding people?" From 1.416.-1T(1)(b): All plans maintained by the employers in which a key employee participates, and certain other plans, must then be aggregated (the required aggregation group). So having a balance would not trigger aggregation. Listen, you are asking all of the right questions, but if you're diving into this with these sorts of question I would strongly recommend you get some external assistance. I recently got back into skiing, and you're on the double black diamond as a strong intermediate. I assume you are working with an actuary? They might be a great resource for you. I know perhaps this will come off the wrong way, but I honestly am trying to give you good advice even if it's tough to hear.

Participant is at Blinky's house?

Ha, MSmith beat me to the punch :) But I guess I get the extra brownie points for including the Q&A itself!