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Hi! Does your plan allow you to take a hardship withdrawal? Hardships can help with medical bills and you can submit the bill for your dependent for proof of hardship. That may be one option. At the end of the day, if your employer failed to set up your loan in the payroll, they are liable for correcting it. You could tell your employer you intend to call the Dept of Labor and let them know that the employer, as ERISA administrator, failed to monitor the plan to determine if the loan was being repaid, and therefore breached its fiduciary duty. They may change their tune then.

For one year, I don't see a problem.

Many more items could be affected, and it's not just the IRS: 60-day rollover requirement, ability to get a document notarized (eg, spousal consent), distribution of SPDs to new participants, distributions of SMM's, due dates for 5500's, due dates for PBGC filings/payments, Annual Funding Notice, quarterly deposit dates, benefit restriction notice (eg, DB plans that fall under IRC 436 restrictions), reporting of PBGC events, etc.

A plan’s administrator should ask its lawyer’s advice. If the plan has provisions that follow (or are construed or interpreted to follow) ERISA § 205, it is not enough that the spouse’s act be genuine; rather, the spouse's consent must “acknowledge” the effect of the participant’s election, and must be “witnessed by a plan representative or a notary public[.]” 28 U.S.C. § 1746 might in some circumstances treat a declaration under penalty of perjury as a substitute for an affidavit. But that is not the same as an acknowledgment. And it is not witnessed. Beyond whether a declaration is sufficient for a spouse’s consent, a plan’s administrator might want its lawyer’s advice about whether the administrator’s conduct would meet its ERISA § 404(a) fiduciary responsibility, and would under ERISA § 205(c)(6) protect the administrator from liability for an incorrect payment (or for denying a benefit). And if a plan’s administrator denies a participant’s claim for a distribution other than a qualified joint and survivor annuity, the administrator might be punctilious in following its ERISA § 503 claims procedure, affording opportunities for a participant to perfect his claim or argue against the administrator’s interpretation of the plan.

EPCRS says, IIRC, you just ignore them.

Thank you for taking the time and explaining. It is very clear that 25% of individual salaries come into play.

The only unwritten rule in retirement plan administration is that those who follow unwritten rules in administering plans end up in trouble with the IRS and/or DOL.

Agree. But, if he is already maxing out the salary deferral in the 401(k) with his employer, no need to do a 401(k) for the side business, unless he wants to for benefits not available under the SEP, such as taking loans. The 401(k)is more expensive to maintain - record-keeping, 5500 for >$250,000.

You may want to see this thread. It’s OK to add a EACA mid-year as long as it’s limited to new participants. But you can’t use the 6 month corrective distribution provision.