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Deep breath. While it may turn into an administrative hassle, you should not end up paying anything. If you get a notice asking for money just follow the instructions and return the form to the IRS asking them to abate the fines due to the fact that there was no requirement to file in the first place. It may take a few rounds to get everything sorted, and take a few months once the process starts.

None that I can think of. You got any?

I point out that other providers may take an entirely different approach, i.e., keeping the termination amendment as generic, permanent, and bare-bones as possible, and using other amendments for each change in law (with advice as to which were needed when). Don't overlook any discretionary amendments that might be needed upon termination, such as when the employer administratively added Roth deferrals in January and would, as an ongoing plan, have until December (for a calendar-year plan) to adopt the amendment, but, for a terminating plan, that amendment should be adopted on or before the formal date of plan termination. Note that the IRS correctly points out that compliance with the latest cumulative list does not equate to having a plan that is fully compliant on the date of plan termination. Pretend that one of the laws passed in December of last year required all ongoing plans to amend by 2020 for a new statutory provision effective for the first plan year beginning in 2018 (I did say "pretend" - but PPA would be a good example of such a fact pattern). Under this fact pattern, that law will not be included on the 2017 Cumulative List (if for no better reason than that the List would have been published before the law was enacted). A calendar-year plan terminating in 2018 would need that amendment on or before the date of plan termination. (For example, PPA amendments might not have been published by document providers until 2009 because Congress allowed ONGOING plans to wait until the end of the 2009 plan year to retroactively amend for all PPA changes, but a plan terminating in 2007 might have been affected by a PPA provision that became effective in 2007, and might therefore have needed an amendment in 2007, even if it did not need, at the time of termination, the eventual full "2009" edition that ongoing plans ultimately adopted in 2009.)

Check the loan policy again. Does it say the loan payments will be ACH'd from the ER's account? I don't think I've seen a loan policy that says how the remittances to the plan will be made. (Though I ahven't made it a point to peruse different loan policies for differences.) They usually state how the participant can/will pay, such as payroll deduction. Check with the R/K. Will THEY be able to do this? Set up individual ACH's for each of these loans?

Downside? Just the normal stuff. You'd need to make sure the recordkeeper can handle it but the participant probably won't be able to submit the contribution so the employer - or the computer system will have to do it. You'll have to deal with it when the ACH fails - either for lack of funds or because the participant decides they can't or don't feel like making the payment. You will get to listen to a unique and riveting story each time this happens and tall tales of how it all was just a big mistake and will get taken care of Friday...at the latest next Monday. They will want to refinance it. Your plan will become their personal bank account. If they have a large amount of money and you want to keep those assets in the plan, maybe it's worth it. Otherwise, if they want any money from the plan, make them take a lump sum distribution and get them out.

I would prefer it was not that way, but I don't think we can say It's unfair, because you have to think of what would happen without such a rule. That's where it would be unfair (IMHO). In the old days (before the rigorous controlled group rules), we could take a company and split it into two companies. Put the rank in file employees in one company, and the HCES in the other and just set up a plan for the HCEs. The controlled group rules prevent that. If you own both companies, they are ALL your employees and they must ALL be taken into account for the non-discrimination rules. If you are willing to leave out the HCEs from the plan, then you have every right to set up a plan just for one of the companies and you will never have a problem with that. It is the provision of tax favored benefits to the HCEs that requires you look at ALL your employees (defined under the controlled group/entities under common control rules).

Correct. If I have two companies; one with 10 employees that brings me in about $300K and another one with just me that brings in about $100K. Without the controlled group rules, I can create a solo(k) plan and defer $24,500 plus make a company contribution of another $25,000. That's $49,500 without having a fund a dime to my employees. I could, then, get cute and put another $11,500 in after-tax contributions to reach my 415 limit. Once in, I can roll this out directly into a Roth IRA. The controlled group rules say, 'no way!' First, the deferrals, Employer Contribution, and After-tax would be subject to 410(b). You'd, then, have to contend with ADP & ACP for the deferrals and After-tax. The entire premise of allowing tax-deductible contributions and income tax deferral on the earnings is because of the value in providing a retirement benefit to employees. The controlled group rules are merely a measure to prevent business owners from 'stacking the deck' in their favor by creating another organization and enjoying these tax benefits without providing anything for employees. I'm not emotionally invested in right or wrong, but continue to work diligently to ensure my business owners get the full tax leverage available to them under the rules as written. Good Luck!

They know their document very well. That election is an hours requirement, not elapsed time. There is another election that specifies months and elapsed time, in which case the ee would only need 1 hour in the first and last month to count all the months. The failsafe for your election is 1000 hours. An ee who worked more than 1000 hours in a 12 month computation period but failed to work at least 1 hour per month for 6 consecutive months would still satisfy eligibility.

And does he understand that with a hardship it is taxable to him, and possibly subject to the 10% early withdrawal penalty? With a DRO, the 10% penalty doesn't apply and it is taxable to the alternate payee.

Never mind. Long weekend.

It could depend to some extent on what the loan policy says. Ours would typically (unless plan wanted something else) suspend payments until end of period of active service, regardless of what the employer considers the service member's employment status to be. If after the end of the period of active service the employee takes a different job or allows his/her reemployment rights to lapse, you would then look to your loan policy to see whether the loan was accelerated or the former employee could continue to make payments. The period of suspension during active service would not be considered to have used up any of the 5-year repayment period.

I respectfully am not sure what the question is. I see there is a question in bold, but it appears you proceed to then answer it or maybe you are providing options a and b? I think you treat the participant like you do any terminated employee. I understand the facts to be that he was still employed while on military duty with an outstanding loan. His loan payments were appropriately suspended at that time (interest should have continued to accrue not to exceed 6%) and then he subsequently terminated. I’m not sure if he has returned from active duty and then terminated or why he was terminated. However, if truly terminated then have to following the loan program for terminated employees .