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Not unless we have to (pension plan). 100%. It's not a suggestion or a discussion. You didn't ask, but the fact that this topic gets as much attention as it does on a policy level frustrates me. The problems we have with the retirement plan "system" are mostly due to not enough money, not how it is paid out. We're all busy right now and I'll leave it at that.

I would have the client decide. There is risk either way. Guess who they will blame if there is a problem? We had a non-profit client like that years ago. We fired them as a client and I sent them a lengthy letter outlining what they needed to do going forward. The executive director did nothing. A few years later, I got a call from a DOL Investigator. The board had fired the director. Both the Board and the new director claimed to have no knowledge of and no records for the plan. The ex-director filed a complaint with the DOL because they refused to pay her benefits and told them we had the plan records. The last I heard, the DOL was pursuing sanctions against the ex-director and those currently in charge of the non-profit.

And, I don't see how she can abdicate her role as Plan Sponsor/Plan Administrator. Whether she realizes it or not she signed on to that by accepting authority as executrix.

I’m in the camp (after 43 years of consulting) of file all of them at once. When you show up with 2 years it’s a dead giveaway that you don’t yet have years 16 and 17 and experience has told me it works better (despite the interim risk you mention) to arrive with all of your ducks in a row.

The plan can exclude the compensation. it just needs to pass all the various non-discrimination testing. It sounds like the primary test to look at is the 414(s) test but you are a bit thin on details. So you might have to do other tests. I have never seen a plan exclude some hours and include other hours. I am thinking that isn't allowed. If the plan can pass testing I guess they could exclude these employees. You seem to imply there are no HCEs which obviously would make passing testing easier.

This might meet the definition of an orphan plan. There are rules under EPCRS for determining a new plan administrator and terminating an orphan plan. See https://www.irs.gov/retirement-plans/plan-sponsor/fixing-common-plan-mistakes-using-epcrs-to-terminate-an-orphan-plan

TPA Jake - We are a TPA who could easily double our fees and be a 316. We struggle with what additional value we are adding. I can already mail notices without being a fiduciary, and I'll charge an hourly rate to do so. Compile the census? Give me a payroll download from your payroll provider and I'm good to go. But listen, to rebeat a dead horse. If you have a client who neglects to tell you who the family members are; or if the client census does not use the proper definition of compensation; or if your client failed to automatically enroll a participant who is eligible; or if they reported incorrect hours for someone and the vesting was incorrect; or if they hired a temporary employee without telling you this and did not recognize that service for eligibility; or if the client deposited Johnny's money into Susan's account and Susan already took a full distribution by the time it was discovered; or if the client forgot to send in the 401k withheld from the bonus run; or if the plan document does not exclude bonus, but the client failed to withhold 401k and therefore match from the bonus; and on and on and on and on; who is responsible? I've just listed the kinds of problems that have gotten my clients into trouble. And as a 316 I cannot figure out how to take responsibility for any of it. Have you had a critical matter arise related to a Summary Annual Report, or the formality of signing a 5500? How about a critical issue related to a fidelity bond? the answer for me is no and no and no. So what the heck would I be charing all of that money for? Listen, I hope you have an answer, because I would LOVE to double my fees, and that's the God's honest truth.

Your last paragraph was exactly my point. I do that now as TPA. Why pay more for the same exact service? The only answer is because there is less liability. Note that liability is not eliminated, only reduced. Does the certainty of higher fees today justify the elimination of a remote liability, pertaining to something like a QDRO or loan paperwork?