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it is all good for 2024, it is probably too late to do VAT for 2023 given that only contributions made up to January 30th can be considered toward 2023 415 limit.

If the plan allows for After Tax Voluntary Contributions, ROTH 401(k) and In plan conversions/rollover provisions to ROTH, then yes. After Tax Voluntary are subject to ACP testing so if the Plans has any NHCEs that are included in testing you will probably have a testing issue that will make this impractical but if these plans are HCEs only you should be good.

Forward all questions to the ERISA counsel used in 2021.

It's a loan. What do you propose calling it that would not lead to discussions like this? I'm not exactly sure what is wrong with "this sort of discussion thread."

I am curious about who the attorney represents and what the pushback is, but don’t bother with extra work just to satisfy my curiosity. If the attorney represents participant, too bad. I assume that you do not represent any individual, so you have no obligation to convince or educate the attorney one way or another. Even if you work for the plan, I don’t think you have any obligation to argue for the correct answer. As a courtesy, you could say that the plan follows its terms, including any beneficiary designations or waivers done in accordance with plan procedures, and will give effect to qualified domestic relations orders. You might go so far as to say that a marital settlement agreement is not something contemplated by the plan or mentioned in the plan’s policies and procedures.

That's what I would do. I think others might disagree but it's pretty harmless.

I understand Roth is ultimately taxable, but if profit sharing at first, is it not subject to the 25% deduction limit that would otherwise apply? Or are you assuming based on the numbers above that it's an issue in this case? I think the simplest way (and what gets done the most? opinions?) is contribute VAT and then do immediate in-plan Roth conversion before any investment experience, leave in the plan as Roth and not even bother with IRA.

What both our esteemed colleagues said - plan document must accommodate, subject to testing unless HCEs plan only, and too late for 2023.

I don't think signing a participation agreement, on its own, would stop the doctor's practice from continuing to sponsor its own 401(k) plan; it would just participate in two plans, both within an ASG, with the corresponding compliance testing issues. With that said, there probably is some sort of contractual arrangement between the doctor's practice and the larger organization. It may have rights, obligations, restrictions, etc. (e.g., "during the term of this agreement, doctor's practice shall not maintain a qualified retirement plan other than through its participation in large org's plan") with contractual remedies if breached. This is obviously outside the scope of the 401(k) plan compliance alone, but could come into play if the doctor "disregards" the participation agreement. As Lou notes, "I didn't read or understand what I signed" usually is a poor defense, especially if counsel was involved at the time.

It sounds like you are TPA to the Doctor's plan, I would recommend the Doctor engage his own ERISA attorney to review the matter and see what needs to be done. Which may or may not involve a VCP filing for 2023 and or 2024 to get the IRS blessing on any fix that may be required.. I will say "I didn't read the document I signed and didn't understand what it does" is probably not going to be the best defense for Doctor A, but then I'm not attorney so don't construe this as legal advice.

And 457(b) plans as well.

Spouses are usually attributed each other's ownership for controlled group purposes, unless they meet the requirements to be exempt. The requirements to be exempt from attribution are described in IRC 1563(e)(5) - does it apply in your case? If they want to be in a controlled group, it should be pretty easy to make that happen. Personally I am of the opinion that collaborating on a retirement benefit program rises to the level of being involved in the management of each other's business, so just the fact they are both talking to you about adopting a plan together probably makes them lose the exemption. But if you wanted to be more formal about it, you could have one of them hire the other (and pay them a salary), or put each other on their company's board of directors.

fmsinc, from the perspective of a loan being an asset in a participant's account, much of what you say is true. From the perspective of how the loan is treated when reported on a 1099R, there can be a big difference. The loan 1099R could be coded as an 'L' or 'M' and paired with at least 5 other distribution codes. The number of combinations of distribution codes leads to discussion threads like this one. Then there are the plan accounting issues when a loan is defaulted before the participant terminates, becomes taxable and the participant resumes repayments. This creates tax basis in the participant's account which also is reported on a 1099R. While in many plans the loan is strictly earmarked to the participant and the participant's account, there are plans where the loans general assets of the plan. In this case, the loan is a plan level investment and not a participant level investment. The loan rules have to accommodate this scenario. When dealing with the treatment of loans, simple often is not so simple.

You should be able to correct a clerical error, but I would need a much more detailed explanation of the facts to conclude that that is what happened and what the appropriate correction would be.

Never underestimate the value of employee relations and participants' perception of the integrity of the company or the plan's service providers. We work with more than a dozen recordkeepers and none of them would push back on posting an expense reimbursement if it is available under the plan document. Trying to fix this with a few extra buck in a bonus just pushes the hassles on to payroll (not to mention the hassles when payroll does not report the bonus correctly when reporting plan compensation). On the other hand, tell a participant that their account was dinked $100 for an expense that was due to a setting that was missed during a change in the investment platform would not be received well. The participant likely will respond that the $100 less in their account will translate into $2,000 (or more) less money that will be available to them when they retire. (Yes, some participants read the communication material they get bombarded with.) Another participant just as likely will say $100 would get them dinner and see a movie. Own it, clean it up and let participants know the company is a responsible steward of the participants' money in the retirement plan.

This seems like a lot of fancy dancin' for an innocent mistake. The sponsor should consider just saying "look we didn't mean this to happen, sorry" and maybe throw a few extra bucks into a bonus. Yes, it's probably possible to make additional PS contributions, and yes, it might be possible to reimburse expenses (but that seems like a long shot to me). But it's likely to be a big hassle.

And classifying a payment as restoration might be unnecessary if the plan includes as reimbursement provision as Paul I describes.

To fit Paul I’s suggestion about classifying a payment as something other than a contribution: The plan’s administrator might want its lawyer’s advice about whether the amounts to be restored to participant accounts might be a restorative payment. 26 C.F.R. § 1.415(c)-1(b)(2)(ii)(C) https://www.ecfr.gov/current/title-26/part-1/section-1.415(c)-1#p-1.415(c)-1(b)(2)(ii)(C). That classification might fit if the plan’s administrator arguably breached ERISA § 102 or § 404(a)(1) in communicating (or failing to communicate) the plan’s provisions, or arguably breached a fiduciary responsibility in instructing the service provider. A fiduciary’s breach need not be proven or conceded; it is enough that there is “a reasonable risk of liability[.]” If a restorative payment meets the reasonable-risk condition, is allocated to restore the harm that follows from the fiduciary’s arguable breach, and meets further conditions the rule specifies, it is not an annual addition. Thus, it does not count in measuring a § 415(c) limit. Likewise, it might not count in a coverage or nondiscrimination test to the extent that the test looks to annual additions. Because the participant does not control a restorative payment, it should not be treated as an elective deferral, and so should not count for a § 402(g) limit, or for a coverage or nondiscrimination test that looks to elective deferrals. This is not accounting, tax, or legal advice to anyone.

Check your plan document for provisions related to the payment of expenses. If you are using a pre-approved plan, be sure to check the provisions in the Basic Plan Document. It is very common for the BPD to have a provision that the Employer can reimburse the plan for expenses, and the Plan Administrator can determine what is a reasonable and nondiscriminatory approach on how to allocate (credit) the expense to participant accounts. If the plan document supports making a reimbursement, operationally the Plan Administrator should be able to give the recordkeeper a file of amounts by person/source, make a deposit for the total of the amounts, and instruct the recordkeeper to post the amounts so they are categorized as something other than contributions (e.g., income, positive expense amount, adjustment...).