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So I'm thinking a best practice on behalf of the plan nonetheless might be to ask for the detailed expense from the funeral home and then add on 20% for the mandatory withholding. The Plan would need to be consistent with such requests for other hardship withdrawals.

There's not really a question of it being a plan asset; it's about how it is treated. Peter gave you the answer in the first part of his response, specifically "The remaining portion, if any, of the proceeds paid to the beneficiary by reason of the death of the insured employee—that is, the amount in excess of the cash value—constitutes current insurance protection and is excludable under section 101(a).” That means it is ineligible for rollover and that's the key. I give you a little credit for stubborness but you are flat-out wrong.

Per Section 4.72.9.3.3 of the Internal Revenue Manual: Terminating profit-sharing and stock bonus plans that don’t offer annuities and aren’t subject to the IRC 417 requirements may distribute a participant’s accrued benefit without his/her consent if the employer and its controlled group don’t maintain any other DC plans other than an ESOP. It cites 1.411(a)-11(e)(1). See also 1.411(d)-4, Q&A 2(b)(2)(vi).

If they put in a new PS plan, they can keep the TH exemption for the existing plan as long as it continues to consist solely of deferrals + SH match. Then then can exclude this particular individual from both the CB and PS plans, and they won't need to give them a TH minimum. If that's too much trouble, they could exclude the individual from the existing DC plan going forward; they would probably still need to give them a 3% TH minimum for 2021 (assuming they are excluded from the CB plan), but after that, nothing.

My emphasis. That means it is in fact paid for from the participant's money.

Not a specific software, but I saw a bunch of them when I was with a CPA firm. They arent cheap, but look at CPA scanning and organizing software. They do everything from W-2s, K-1s, and brokerage statements.

If it's an ACA, not EACA or QACA, yes.

They CAN, but in all likelihood, they WON'T. They will tell you it is CSV, over and over again. Even if you send them RP 2005-25. If only TPAs could bill the true value of their time spent messing around with this stuff...

Ever the optimist.

Heck, years ago when I was church treasurer I generated "payroll" for 2-3 employees on a spreadsheet, sent the w/h in quarterly, then generates W-2s and 941 at year-end using Social Security Business on-line. It was very easy, no cost, and did not take a lot of time. Add it to the spouse's job responsibilities and do things the right way.