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…. and also remember the special application for 5% owners.

There is no bright-line definition. I agree that the plan administrator has to figure it out based on all the circumstances. However, I suggest that a self-employment situation, including (or especially) a law firm, is full of opportunities to abuse, so the plan administrator should be looking for a hook for start of required distributions. In particular, any change in any perquisites should be examined. I have been through it, and it is not easy because the arrangements can be nebulous and not consciously abusive. What constitutes "retirement" of a venerable law partner is an issue for law firms beyond 401(a)(9). Remember the purpose of the law.

I have never seen a cohesive definition. Hence, it is up to the Plan Administrator to decide. Whatever criteria they end up using is best if documented in some fashion and then applied to future determinations. But in the circumstance you posit it doesn't sound like retirement is an accurate description.

I would think his accountant should be providing these answers.

I think you are looking for a published rate of "fines" for this - and it doesn't exist. Late contributions are a breach of fiduciary duty - the consequences of which range from "making the plan whole" to "being banned from ever serving as a fiduciary again" to "federal jail time" (misuse of employee benefit plan money is a federal felony). Bottom line, you leave your fate to the DOL, the DOJ and a judge. Very disconcerting, to say the least. It's also a prohibited transaction - whose penalties are widely known.

Which is part of the correction. Your argument is that you don't want to fully correct because it is inconvenient.

Simple solution - DON'T be late with contributions. The DOL has been harping on this for more than a decade. Business people have deadlines for all sorts of things - with penalties. A widget manufacturer who doesn't get product to GM get's stung HARD. A road paver who doesn't complete X miles by a certain date is penalized. If they are BUSINESS PEOPLE, establish a business process to handle this on time, and it isn't a concern.

I'm sorry, but IF the employer has corrected the error, then 99% of the work (data collection) has already been done. Using the VFCP platform is pretty darn easy ONCE the data has been collected. If you haven't already collected the data, then you probably haven't corrected the problem.

Simple: An audit. Using VFCP is far, far, far easier and less time consuming than responding to an audit request. Then, depending on what they find, all sorts of options for a plan sponsor to write a check (or worse) may happen....

Search for "(ix)De minimis change in the timing of an optional form of benefit." The cite might be Q&A-2. That is 1.411(d)-4, Q&A-2(b)(2)(ix) rather than 1.411(d)-4, Q&A-1(b)(2)(ix).

Luke: are you sure you have typed the reference correctly?

Take a look at Treas. reg. 1.411(d)-4, Q&A-1(b)(2)(ix). Clearly, you can certain go from 12 per year, or 10, or whatever, down to two. Two is probably as low as you can go.