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The very broad and general answer to your very broad and general questions is negative. Circumstances matter, because the plan administrator is required to act prudently under the circumstances in following the terms of plan documents and the law. Treating your example, and adding details and focus relating to the joint and survivor annuity (J&S) rules applicable to most private pension plans, if the participant were on record with the plan as married, and then got divorced, and then retired and applied for benefits without advising the plan administrator of the divorce (and the plan administrator having no other notice or knowledge of the divorce), the plan administrator would likely process the benefit as though the particpant were married and comply with the applicable J&S rules. That means that the apparent spouse would be givien information about the survivior annuity benefit and the participant would receive that benefit (with the apparent spouse as contingent annuitant) unless the apparent spouse consented to a different form of benefit. The plan administrator would not question the marital status. But that is not the end of it. By not revealing actual marital status when that status is matierial to the benefit, the participant and former spouse are committing fraud, which, if discovered, would result in consequences too varied and complicated for speculation. If the participant stated that the participant were no longer married, the plan administrator would probably ask for proof (not automatically search itself), because the spouse of a participant has rights that the plan administrator is charged with protecting. Your question is redolent of nefariousness. Or are you simply concerned with specific requirements of fiduciary responsibility?

This forum is full of stories from people who tried to do it themselves and ended up fouling things up. Of course, if there are any business owners who are successfully administering their own plans, they probably aren't coming on here to tell us about it, so you do kind of have a self-selecting group. That said, I would strongly encourage you to hire a TPA. For a one-member LLC with no employees, you won't have any testing and won't even need a 5500 until combined plan assets go over $250,000, so prices should be pretty reasonable, and you have the confidence of working with an expert who knows all the rules. For the cash balance plan you are required to use the services of an enrolled actuary even if you don't have to file anything, so there's no doing it yourself with that one. If you can tell us where you're located, I'm sure someone on this board will know a local TPA who can help you. Our company for example does administration for dozens of owner-only and micro-sized plans so there are definitely firms out there who cater to your market.

Personally, I would never want to go down this rabbit hole. We do qualified plan administration, not investment counseling. Could you do something like this? I'm certain you could. I just wouldn't want to - at least up front, I can't see that it would add enough "value" to our services (by the time you have disclosed and CYA to the nth degree) to ever make it worth it. If you do, have fun!

Sometimes this site provides bonus features not advertised!

Thank you. This is actually precisely what we decided on Friday as the "best" course of action, taking into account all factors.

Look into the rules for Multiple Employer Plans and consider having Company B be an adopting employer of Company A's Plan.

Agreed, plans are combined to determine the filing threshold, but if they are required to file then each must file separately.

I suspect a written explanation of the kind austin3515 describes might help some participants make an informed choice, and so might lessen a highly-compensated employee’s displeasure about receiving a corrective distribution. But I suspect also that many recordkeepers and third-party administrators don’t do this communication (even if one would put in the work to write a careful explanation) because it might “step on the toes” of an investment adviser’s or a broker-dealer’s representative, who prefers to be the source for that financial-planning guidance. A communication of this kind might work if the recordkeeper’s or TPA’s computer system is automated to know and use information about the identity and contact points of each participant’s advisor.

The plan might also allow you to designate a non-spouse as your beneficiary.

Not saying that doesn't happen, a lot, and if their accountant is on board, then fine, but how is that justified as a reasonable deductible business expense?

Sorry - but I'm going to get on my soapbox on this one. First, if *anyone* suggests that hiring another fiduciary relieves other fiduciaries of liability, RUN. Don't walk. Don't ask questions. Just get the heck out of there. The "co-fiduciary" liability thing is real, and the duty to monitor other fiduciaries is another fiduciary obligation that most plan sponsor centered fiduciaries do not understand. While a 3(38) is an "exception" to some extent that does relieve other fiduciaries of the liability for investment decision making, those fiduciaries still have the obligation of prudently hiring, prudently monitoring, and prudently firing when appropriate. That, in my (attorney-0litigious) mind means understanding their process, and ensuring they are following that process, and determining that that process is an appropriate process for their plan and it's participants/beneficiaries. I would suggest entering into the agreement the OP posited itself would be a breach of their fiduciary duties. It does, as Bill suggest, appear at least partially like it is a 3(21) agreement. Lots of questions about the agreement. Even more questions about the plan sponsor/fiduciaries to truly understand what they are getting into.... OK. Soapbox put away (for now).

I agree with Luke. At least there is a paper trail showing the initial refund. And in this case, I would include gap earnings in the distribution just because it's been a year since it was supposed to have been distributed.

What does the retroactive amendment say? Does it say that the employee became a participant solely for elective deferrals or did it say they became eligible for all contributions? Does the plan document say that all employees who are eligible for deferrals are eligible for safe harbor contributions, or does it impose a minimum service condition to be eligible for safe harbor? Is the plan top heavy?

Yes. All one-participant plans of the employer are considered together to determine if the $250,000 limit is reached.