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Invoice him $300 for researching what to do with an unallocated forfeiture account.

Yeah that is why the DOL program that caps the fine is so important. It used to be you could try to ask for some kind of forgiveness but at this point the down side is too much. Likewise the filing a form without the auditor's report but a note is getting riskier also. That fine for an information return with no tax implications is just plain silly

Unless there are some special circumstances, then I agree.

I realized I assumed you were talking about a plan that defines interest crediting rate with reference to the funding segment rates. But you didn't actually say that. So, when you said "they were using these interest rate s," using them for what purpose?

Then, barring any unusual plan provisions, it should be fine.

On #1 unless there are facts not disclosed I agree, no controlled group. On #2, interesting. As long as he isn't over the 30,000 limit and has at least $7,500 in deferrals to each plan I see no problem with what you are describing. It's an interesting loophole but it doesn't look problematic under the code.

I'd resign regardless of whether they ultimately decide to correct or not. Life is too short to deal with this type of client. We would certainly seek counsel re our obligations to report or not report, etc. Rock - TPA - Hard Place.

Well, first, did a plan exist? Communication to participants is an essential part of establishment of a plan. If not, then there may be tax fraud, depending on how contributions were dealt with. If a plan did exist, misuse of employee benefit plan assets is a FEDERAL felony (and Ill look for the cite). In either event, I would 1) advise them of the error of their ways; 2) resign immediately, and 3) consult an attorney about your obligations concerning having witnesses/having information/evidence of the commission of a crime. Part of me also would also anonymously alert the DOL (their website lets you do that) about this situation (and I resist that urge almost daily....)

I third the prior two suggestions (Bri and CuseFan). Follow the terms of the plan document. As an aside, my advice is to always start with the plan document. Read it. Do what is says. If not clear, go to the drafter for commentary and then have the proper plan administrator make a formal interpretative determination. All of this while keeping in mind the law and regulations. If the plan document appears to require something that you believe may be illegal, consult a lawyer. So many, many questions can be answered by reading the plan document. After all, that's one of the things it's there for . . . to tell you what to do.

If they have already forfeited under the terms of the plan, whether by distribution of the vested balance or incurring five consecutive one-year breaks, then you do not restore/fully vest. If they have not yet forfeited under the terms of the plan, then they must be fully vested. The key here is "the terms of the plan" as that governs what needs to be done. If people have been gone for longer than five-years breaks but have not yet been forfeited, then you have an operational compliance issue to fix that is different/independent from your question, such as allocating amounts retroactively to applicable years based on entitlement in those years.