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Unless you opted into electronic notification point out specifically that the first time you were notified was the bill collector as you have no prior written communication from them. Ask them to indemnify you from any losses, taxes, fees or tax preparation services you may require as a result of their error. Also require them to removed the bill collector and ANY negative reporting to your credit that may result from them having sent this to collections without notifying you in writing that the error had occured. Tell them while you are happy to return any funds erroneously deposited to your account to the Plan, you will not be dealing with any bill collectors on this matter. Also you will need a detailed accounting of how they arrived at the over payment figure in question and why you are not entitled to that payment. If they do not agree let them know that your next call will be to the local branch of the Department Of Labor.

There are a couple of assumptions being made - perhaps you could clarify or confirm - Are all four entities part of the plan? Just because they are an affiliated service group doesn't necessarily mean they are all part of the plan. Some plan documents do not automatically pull in related employers, others do, best practice is to have them all signed on as participating employers if that is the intent. Similarly - Are you sure the W-2 compensation is eligible for deferrals? Part of this may depend on the answer to the first question, but I would also double check the plan's definition of total compensation, and plan compensation. It could be that the compensation has to be included for plan compliance, but if it is from an entity that isn't part of the plan, it might not be eligible to defer from. To answer your actual question - does your plan document say that contributions attributable to the payroll of a specific participating employer must come from that employer? this kind of language is fairly common on documents for MEPs, but I see it on some single employer plan documents too. If the document doesn't say, then the plan probably doesn't care where the required contributions (Safe Harbor match) come from. That's an issue for the business CPAs to all work out when doing the deductions for the four entities. Are you the business accountant trying to figure that part out?

Here are my general rules (because there are always exceptions): 1. If a 401(k) plan is going to be deferral only, I recommend against it or prefer they go somewhere else. Past experience shows that they almost never work out successfully. 2. If an employer qualifies and the limits are acceptable. a SIMPLE IRA is quite often the best choice instead of a 401(k). I know that doesn't work here because of the employer contributions, but I still often recommend it. 3. While our industry exists because of "state" supplied rules, I'm generally opposed to state run programs.

Bill Presson is correct. From the content of your first three questions, it indicates you need a tax professional to correct these to the extent possible. For the last question, Excess SEP IRA contributions not returned by your tax filing date including extensions are a plan error. This is most definitely not an inexperienced DIY correction process. You need to engage an experienced professional retirement plan specialist. Tax professionals seldom have the knowledge or experience necessary.

Yes, you can generally adopt a retroactive amendment to the plan to reflect its actual operation (in this case, inclusion of the 4th company in the plan). As I recall, it would have to be done under VCP. This is not SCP eligible.

This calls for professional tax advice. The Owner needs to hire someone to help solve this problem.

Just because 7 business days is the DOL safe harbor for small plans does not mean the loss date is automatically the 7th business day. The loss date is the date the contribution would have been deposited, absent the error. If the business normally deposits employee contributions the day after payday, then that is the loss date, even if they could have done it up to a week later and not run afoul of this rule. What I have done in the past (not always, but when the situation calls for it) is filter a transaction history report down to just the timely deposits, add a column equal to the difference between the pay date and the deposit date, and take the mode of the values in that column. That is how many days it typically takes the employer to deposit the contributions. Then I add that value to the pay date for the late transactions, and use that result as the loss date.

There are instructions for doing the calculations yourself somewhere on the DOL website. When you have more than a handful of entries it might be easier to use a spreadsheet. Edit: The instructions are on this page: https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-administration-and-compliance/correction-programs/vfcp. Scroll down to "Performing the calculation manually" under "Examples." The interest rates and factors needed are linked at the top of the page.