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Just saw a brief article from Fred Reish on this. I'm wondering why an employer would want to get involved in this, if approached by a recordkeeper, etc.? Seems like yet another possible fiduciary issue, yet another possible complication or item that may bring up questions, etc. From my viewpoint, a participant has been notified about the cashout. They haven't responded, so account is rolled to IRA. Period. No further involvement - wash your hands of the whole thing. The participant then can do anything they want with the IRA. Don't know what other thoughts folks might have?

You may find this survey conducted by the PSCA about preparedness for implementation of the Roth Catch-Up provision: Roth catch-up status.pdf

I heard the same but I don't see how it is even possible since this is how they paid for the entire bill.

Not sure of the impact here, but remember that 5th anniversary of participation does not mean 5 years of participation. They could be different if there is an hours requirement for a year of participation. Said another way, once some becomes a participant in a plan, their NRA is supposed to be known and should not change based on hours worked after that time.

Generally, you can only withdraw money from a 401(k) plan upon attainment of age 59½, termination of employment, financial hardship, or termination of the plan (there are a few other special distributable events like QBADs and QDDs as well). IRC 72(t) imposes a 10% penalty on any distribution from a plan, with exceptions for distributions made after age 59½, or after the death or disability of the employee, or if termination of employment occurred after age 55, or various other reasons. So it's not that the plan allows a penalty-free distribution at age 55 - it's that the plan would generally allow distributions after termination of employment (at any age), but if termination of employment occurred after age 55, then the 72(t) excise tax does not apply. The plan doesn't need to specifically allow this or really address it in any way; it's simply a consequence of the way the tax code is set up. However, a 401(k) plan may not permit distributions at age 55 in the absence of another distributable event. To get back to the original question, I personally see little to no point to defining an early retirement age in a typical 401(k) plan.

To comply with ERISA 404(c), participants must have an opportunity to exercise control over the investment of their accounts. Failure to offer that opportunity does not result in disqualification since it is not part of the tax code, but it could result in loss of relief of co-fiduciary liability for the plan's other fiduciaries. If the plan document says that participants will be given the right to direct the investments in their account, then failure to follow the plan document is an operational failure that is potentially disqualifying. The right to direct investments is considered a benefit, right or feature that must be available to participants on a nondiscriminatory basis. If HCEs have the right to direct their investments but NHCEs don't, you could have a 401(a)(4) violation, which is disqualifying. That aside, what is a "catch up profit sharing contribution?" And when you say "It was requested for these funds to be deposited into specific accounts" - requested by whom, and what accounts? The plan doesn't have to let participants invest in anything under the sun; in fact, it would probably not be prudent to do so. The plan can restrict the participants' options to a menu of investment alternatives.

Because the credits are intended to encourage employers to establish new plans, they are not available if the employer has maintained a qualified plan, simplified employee pension or Simple IRA plan for substantially the same group of employees in any of the three taxable years immediately preceding the first year for which the credit is allowable. IRC §45E(c)(2) and (f)(4).

A plan doesn't have to fully vest account balances upon Early retirement age (as opposed to NRA). Will there be a noticeable number of participants who might not be getting vesting credit each year? If you require 1000 hours a year for vesting credit, but everyone works that much anyway, then sure - anyone getting to the 5th anniversary of plan participation will have earned 3+ years of vesting credit. But if you have a good number of part-timers, you might have folks who don't typically vest in their match contributions - that would make the ERA definition more important, in terms of requiring years of participation to it. Typically in a DC plan I see the only "benefits" of naming an early retirement age are (a) possible waiver to allocation requirements for the year of termination, (b) possibly having in-service withdrawal ability tied to an ERA, or (c) getting less-than-65ers a faster track to 100% vesting. If terminees already can get distributions upon termination of employment, it's not as though the presence of an ERA speeds up their ability to receive benefits.