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In the Who Must File section: Sponsors and administrators of government, church, and other plans that are not subject to the vesting standards of section 203 of ERISA (including plans that cover only owners and their spouses or cover only partners and their spouses) may elect to file Form 8955-SSA voluntarily. See the instructions for Part I, line A.

Call the number on the notice. Based on what you describe, once the IRS realizes they've made an error, they will relent. May take a while.

Thanks, @John Feldt ERPA CPC QPA! My chart of limits (which goes back to 1996, if you play with it enough!) has now been updated with the projections.

No. If they don't respond they get the annuity.

MPP source is subject to QJSA rules, so w/o participant waiver/consent and spousal consent, if applicable, you must purchase an annuity. That's why clear communication, forms and follow up are so important. If you tell someone, hey, if you don't return your properly completed forms, then instead of getting that $20,000 portion of your account you'll get $25/month 10 years from now when you're 65, they'll likely respond.

See EPCRS: (5) Failure to implement an employee election. (a) Missed opportunity for elective deferrals. For eligible employees who filed elections to make elective deferrals Page 88 of 140 under the Plan which the Plan Sponsor failed to implement on a timely basis, the Plan Sponsor must make a QNEC to the plan on behalf of the employee to replace the “missed deferral opportunity.” The missed deferral opportunity is equal to 50 percent of the employee’s “missed deferral.” The missed deferral is determined by multiplying the employee’s elected deferral percentage by the employee’s compensation. If the employee elected a dollar amount for an elective deferral, the missed deferral would be the specified dollar amount. The employee’s missed deferral amount is reduced further to the extent necessary to ensure that the missed deferral does not exceed applicable plan limits, including the annual deferral limit under § 402(g) for the calendar year in which the failure occurred. The QNEC must be adjusted for Earnings to the date the corrective QNEC is made on behalf of the affected employee.

We've seen it; I believe it is a "warning" and not an "error." I love FTW but some of this stuff is annoying (e.g. in compliance, if the plan is top heavy, it is shown as a "failure" - it's not a failure, it just "is.")