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Assuming there was no document that called for a fiduciary to do what the auditor suggests, among prudent responses to such a communication a plan's administrator might increase the care, skill, prudence, and diligence the administrator uses in its selection of an independent qualified public accountant.

If it were me, the Code of Professional Conduct for the actuarial profession would be relevant. I would make sure I had all the facts and make sure nothing in my service agreement prohibited my "speaking up", and then speak up. None of us should tolerate theft.

I believe the funds, if paid to the plan, do not belong to the plan (they are erroneous) and should be returned to the participant.

This is a typical ethical conundrum. What to do; what to do? Each of us has to answer to our own ethics and our own guiding rules and hopefully they will not conflict. What would I do? Let me think.... 1) Resign. Immediately, with a letter and an explanation that I believe they have both disqualified their plan (the 415 issue) which means their rollover IRA is "no good" and subject to the 6% cumulative compounded excise tax which will eventually take 100% of the rollover as an excise tax when the IRS challenges it, and I would also explain that they have actually stolen money from other participants and besides possible criminal penalties, IRS penalties and DOL penalties, their bonding company is also going to go after them since the bonding company will have to make the other participants whole to the extent of the theft. 2) No way we are going to prepare a 5500 at all; see 1 above. We no longer work for this crook. 3) Now the hard one: what do I do about reporting this to someone? I'm pretty sure I don't have a legal obligation under the society ethics rules. Now, what about my moral responsibility? If a participant calls, I'm going to tell them to contact the DOL since I no longer work for the client. Since I have never actually had to deal with this kind of an issue, I'm not sure what I would do. My heart tells me that the crook deserves to be taken to task, which would mean the DOL has to be notified. Is there a John Doe notification to DOL like IRS has John Doe ruling requests? I'm sure a private phone call to the local DOL office will get action. Would I do that? Hmmmmmmm.......

That is still the definition of "standard interest rate" in 1.401(a)(4)-12

@austin3515 the ask the experts panel agreed with you, as the loan is an investment, you can rebalance. They hedged by added that just because it can be done, it doesnt mean that it should be done. There was also a comment questioning whether you really want to put that kind of language in your plan document, leaving open the question of whether additional language is needed

Bill tried to find Larry for me to no avail. Maybe on Wednesday. (If I'm sober enough to get to the sessions...lol)

"The agent wants to provide insurance..." You may have inadvertently hit the nail on the head. Bottom line you are correct for all reasons you state and then some. Ask the agent if the insurance co will opine that what is proposed meets the BRF requirements and if the ins co will indemnify the employer should the IRS disagree. Of course they won't. Every policy sold says the ins co is only standing behind the terms of the policy contract, and not any tax treatment.

The recipient's mailbox may be full (or close to full) and the added size of the attachment could cause the message not to be received. PDF files are a common vector for transmission of malware and viruses. If the sender's PC is infected, they could be unwittingly transmitting the infection to the recipient. These both seem like very remote possibilities. The size of a properly created PDF is usually not more than a few dozen KB, and the second threat can be reasonably mitigated with appropriate security measures.

I met Bill, but I think Larry is ducking me. lol

You are correct that the 25% limit applies alone to the DC plan when the DB plan is covered by the PBGC. The DB plan is still subject to its own limit, so they can can only do "as much as they want" to the extent they do not want to do more than permitted under 404(o). Assuming the DC plan is a profit sharing plan, they of course have to have some profit left over after the DB contribution in order to make a contribution to the DC plan. If they do, they can contribute up to 25%.

This comes the safe harbor of 414(n)(5). What it is saying is that, if the leased employee is covered by the leasing org's MPP (which meets the requirements given), then you do not have to treat them as as leased employee of the recipient org (your client), but solely as an employee of the leasing org. In other words you can disregard them for plan purposes. I've never asked a client about it because it seems unlikely (to put it mildly) that a leasing org would sponsor such a plan.

20% withholding is mandatory on eligible rollover distributions. 3405(c) A hardship withdrawal is not an eligible rollover distribution. 402(c)(4)(C)