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Thanks!

As to your first question, yes, absolutely. As to the second, I'm asking because sometimes the funding companies charge a separate fee "per plan" - just looking, at this point, to minimize fees at the request of the broker. We're just at the initial "feasibility" investigation, and I want to get my ducks in a row. Thanks.

Yeah, I don't know it is so c'est la vie. The individual was entitled to receive his account balance minus $3,000 for w/h, not minus $5,000 for withholding, so he had $2,000 less to roll over if he intended to roll over. It is especially nuanced since there is Roth money involved.

Full distribution, meaning a total distribution of the participant's account? I assume the 5,000 and 3,000 numbers are rounded off? The distribution was in 2018? Has the participant filed their 2018 tax return yet? If so they will need to file an amended return. Report what was actually withheld. Since there will be 2 forms, I would report the full amount of the withholding on the form with the code 7 and 0 withholding on the form with code B. When the participant files (or amends) their tax return, they will get a refund of any excess amounts that were remitted to the IRS.

My view is that if the individual's status is not clearly within the 4 corners of the policy (fully insured group or stop loss, which will wrap the SPD), you have a potential for claims to be denied if they are large, and for employer to be stuck in the middle, having promised something to the "employee" that an insurer won't pay for. Usually I tell client that they need to disclose in a letter to the insurer how they are interpreting "employee" to include this person.