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I imagine the plan allows for distributions at NRA and whether or not it is an RMD she can probably take it anyway. Just check the document t o make sure it's allowed. And since it's technically not an RMD it's eligible for rollover subject to the 20% withholding rules. But if she doesn't want the "RMD" she doesn't have to take it for 2021.

Once the money is withheld from your paycheck, it becomes an asset of the plan. Since your employer did not promptly deposit those contributions into the plan, they have likely engaged in a prohibited transaction under ERISA. As Lou S. mentioned, the correction for this error is for them to make up the amounts with earnings and deposit it to the plan. If your former employer is not responsive, you could get the Department of Labor involved, as they are the government agency with jurisdiction over participant rights in retirement plans. https://www.dol.gov/agencies/ebsa/about-ebsa/ask-a-question/ask-ebsa

IRC 404(a)(6)

Perfectly acceptable.

Some more details on the "old method" that still applies for H&W plans: The standard ERISA disclosure rules provide that ERISA-required documents must be provided to participants in a manner that’s “reasonably calculated to ensure actual receipt” by the intended recipient. The DOL has a safe harbor under which plans will be deemed to meet this standard. This method is sometimes misunderstood as a requirement—it is not. It is merely the only guaranteed way to satisfy ERISA’s disclosure requirements by electronic media. The safe harbor generally requires either (a) the employee has work-related computer access that is integral to his or her job duties (i.e., employee works at a desk with a computer), or (b) the employee’s electronic affirmative consent to electronic disclosure. So if all of the company’s employees have work-related computer access that is integral to their job duties, it is clear that no authorization is required to distribute ERISA documents electronically. If there are employees who don’t meet this standard, the safer approach is to meet the DOL’s safe harbor by receiving their affirmative consent to electronic disclosure of ERISA documents. Here's a highlight from the "old method" electronic safe harbor still in effect for H&W: 29 CFR §2520.104b-1(c): (c) Disclosure through electronic media. (1) Except as otherwise provided by applicable law, rule or regulation, the administrator of an employee benefit plan furnishing documents through electronic media is deemed to satisfy the requirements of paragraph (b)(1) of this section with respect to an individual described in paragraph (c)(2) if: ... (2) Paragraph (c)(1) shall only apply with respect to the following individuals: (i) A participant who— (A) Has the ability to effectively access documents furnished in electronic form at any location where the participant is reasonably expected to perform his or her duties as an employee; and (B) With respect to whom access to the employer’s or plan sponsor’s electronic information system is an integral part of those duties; or ...

Your HCEs based on comp are based on the 12 month look back year unless you are using the calendar year election in a non-calendar year plan. So for your short PYE 10/1/2020 - 2/28/2021 your 12 month look back would indeed be 10/1/2019-9/30/2020. And yes it would be comp of more than $125K in that period. TPG election may or may not change results depending on your group but unless it was already in doc too late to amend now after PYE.

Last May’s 29 C.F.R. § 2520.104b-31 (Alternative method for disclosure through electronic media—Notice-and-access) is available only for retirement plans. The Labor department reserved on health and other welfare-benefit plans. See paragraph (c). https://ecfr.federalregister.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/section-2520.104b-31 A welfare plan may deliver electronic disclosures as provided under a participant’s or beneficiary’s affirmative consent. 29 C.F.R. § 2520.104b-1 https://ecfr.federalregister.gov/current/title-29/subtitle-B/chapter-XXV/subchapter-C/part-2520/section-2520.104b-1

The examples in Publication 590-B (starting on Page 11) suggest that RMDs are required in year 1 through 9 and the account must be exhausted in year 10. https://www.irs.gov/pub/irs-pdf/p590b.pdf

And on a final bright side, the plan could disaggregate its 410(b) and 401(a)(4) testing for 2020/2021. The statutory group is only HCEs. The otherwise excludable group is only the NHCE.

I like that - a very civilized way of saying it. Nicely put!

We are talking about eligibility requirements, not allocation requirements. If I have no eligibility requirements with immediate entry, and I amend to require age 21 + 1 YOS, anyone who has not attained age 21 or had 1 YOS has not met the eligibility requirements. Whether you are still eligible depends on the current requirements, not what the requirements were when you first entered the plan (unless the amendment or document itself makes an exception for current participants).

The employee became a participant because there was no service requirement. If the plan is amended to require 1,000 hours, and the employee has never had 1,000 hours, the employee is no longer able to actively participate unless there is an exception to grandfather current participants. Like BG said, participation is not a protected benefit.

Adding to Pam Shoup’s questions: Why would a plan’s administrator not use the IRS’s method for not receiving source documents and instead relying on the participant’s written statement (made under penalties of perjury)? The hardship self-certification method now is in the Internal Revenue Manual. IRM 4.72.2.7.5.1 (08-26-2020) https://www.irs.gov/irm/part4/irm_04-072-002#idm140377115475856 Under that method, an IRS examiner must not ask for source documents unless: 1) the notice to participants or the claim “is incomplete or inconsistent on its face”; or 2) some participants received at least three hardship distributions in a plan year, there is no “adequate explanation for the multiple distributions”, and the examiner’s manager approves the request for further information. If a plan’s administrator and its recordkeeper or TPA design the software correctly, #1 would never happen (except for a paper claim, and then only if the claims administrator is careless). And #2 seems unlikely unless abuses are bad enough that the examiner is motivated to do the extra work of getting her manager’s approval. Further, may a plan limit hardship distributions to no more than two in a year?