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Nationwide RK must be run by tree-killing climate change deniers!

What was involved in checking? If you mean you looked them up on the DOL's website, you won't find them there, because it does not show 5500-EZs. If you believe that the Form 5500-EZ was not filed for one or more years for which it was required, then file the missing forms as soon as possible under the IRS relief program. https://www.irs.gov/retirement-plans/penalty-relief-program-for-form-5500-ez-late-filers

EE is 100% vested.

I believe it's the lending of the money outside the Sec. 72 parameters which specifically gives rise to a prohibited transaction - which is why the 50k limit would be there in the first place. But your guy didn't do that either time. (I vote for "you're fine.")

A plan sponsor properly advised and serious/responsible about compliance would have kept signed and dated copies and/or certified mail return receipts (IMHO).

I think there is a good chance that this activity would invalidate the spousal non-involvement exception, and there would be a controlled group.

Bill Presson, thank you for spotting my miscue. Sorry if I misread the mention of “plan documents”. If Kac1214 asks about how a service provider gets a plan’s administrator’s directions or instructions on whether and how to pay a plan’s distribution, services vary widely, and often are affected by a trust agreement’s terms, a service agreement’s terms, or both.

You are correct, no CG, but make sure it's also not an ASG before designing separate plans.

Bill is 100% correct. He became eligible on his date of hire and immediately 100% vested. Any reduction from 100% would be a prohibited cutback under 411.

Section 125(g)(3)(B)(i) is referencing eligibility for the cafeteria plan, not the underlying benefits offered under the cafeteria plan. Thus, while eligibility for a fully-insured health plan could be structured in that manner, the employer should require officers to wait 60 days to make pre-tax contributions under the cafeteria plan. That is, they should be required to make only post-tax contributions until they have satisfied the cafeteria plan's 60-day waiting period. The other option would be to create two cafeteria plans with different waiting periods (assuming both can pass eligibility testing).

I would agree that looks correct with what you've laid out with respect to 1563.

If the document doesn't say that then the plan sponsor has a bigger problem.

What does the plan document say? It likely says the spouse at the time of death is the 100% beneficiary unless such spouse has provided written, witnessed consent to waive that right. Meaning, the remarriage likely makes the new spouse the 100% beneficiary regardless of the prior designation. However, you need to check the terms of the plan document.

Isn't the Sec. 72 parameters only effective when the loan is taken? Like taking 50% of the vested balance, and some short time later due to market losses the loan is now more than 50% of the vested balance... but I thought this situation is OK since Sec. 72 parameters were not exceeded when the loan was taken. So I think I vote "you're fine" too.

Without knowing or remarking on the particular situation you describe: The Internal Revenue Service allows a method for a claimant to self-certify her hardship without submitting source documents as a part of the claim. Instead, a plan’s administrator or claims administrator relies on the participant’s written statement (made under penalties of perjury). A claimant must pledge to keep her source documents, and to furnish them if asked. But a participant’s breach of that promise won’t tax-disqualify the plan if the plan’s procedure is correctly designed and administered. Internal Revenue Manual 4.72.2.7.5.1 (08-26-2020) https://www.irs.gov/irm/part4/irm_04-072-002#idm140377115475856 The IRS’s without-source-documents method can work if the plan’s administrator and its service providers carefully meet all conditions of the regulations and that method. 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 service provider design the software correctly, #1 would never happen (except for a paper claim, and then only if the claims administrator is careless). About #2, a plan might limit hardship distributions to no more than two in a year, making #2 not happen. Even if the plan does not limit the number of hardship distributions, #2 might not happen unless abuses are bad enough that the examiner is motivated to do the extra work of getting her manager’s approval. Yet, there is a divergence of opinions about whether it’s wise to use what the IRS calls the summary-substantiation method described in the Internal Revenue Manual. A search in these BenefitsLink forums will turn up a few discussions that air different views.