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1. you can't make it more restrictive retroactively. We are past 2/1/2024 so that ship has sailed. Pick a date in the future. And depending on the circumstances, an amendment can make someone no longer eligible, but that's a whole other conversation. 2. to apply or not apply to existing employees depends on how the amendment and document is written. I've seen it done both ways.

As JAA notes the change must be prospective not retro active. Eligibility is not a protected benefit so you could for example change it to 5/1/2024 (instead of 2/1/2024) and the amendment could grand father eligibility for all employees who had met the old the eligibility condition or effective with the change you could make all employees who do not meet the new eligibility but that can get a bit confusing tracking an employee who is eligible, then ineligible, then eligible again. Can be a communication hassle so unless there is a really goo reason for making these folks ineligible most Sponsors I have worked with change the eligibility prospectively and grandfather eligible for those who meet the old eligible at the time of the amendment.

Also - its not as simple as the spouse cashing the check or sending it to their IRA. the estate got a 1099-R showing the gross taxable amount. it needs to be amended. and the check voided, and then a new check issued for the spouse's distribution. It's as if a W-2 was issued to the wrong person. just sending money to the right person and giving the right person a W-2 doesn't fix the tax situation for the wrong person. The IRS is still going to think the estate has those $$ as income and is going to want to see the taxes on it. The Form 945 is only one part of it. and yes, the IRS can send the $80,000 back, but it will go back to the PLAN, not the spouse. That's part of unwinding the incorrect distribution. Also- the plan has a responsibility to make sure the distribution occurred correctly. the estate signing over the (likely stale) check to the spouse or their IRA does not accomplish that at all. Given that the amount involved sounds substantial, the correction should really be handled carefully.

Each covered service provider is responsible for disclosing to the plan sponsor of any fees it receives from any source other than from the plan sponsor. If the broker account provider is receiving payments from the participants' accounts or from investments held in the participants' accounts, then the broker account provider is responsible for disclosing all such fees to the plan sponsor. If all of your fees are paid by the plan sponsor, then you have nothing to disclose. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/fact-sheets/final-regulation-service-provider-disclosures-under-408b2.pdf

Also, you don't fully describe the error, in particular the errant contribution. If the error was not made, would that have resulted in more of a contribution allocated to other participants (we contributed $X to be allocated to those eligible based on pay) or simply would that contribution amount not been made at all (we wanted to contribute X% of pay for those eligible)? If the former, then the defect likely warrants correction where someone (employer, TPA, shared) makes the plan whole by funding, and then such is allocated. If the latter, participants have not been harmed, this is simply an inadvertent error the plan sponsor can choose not to recover.

Also, be aware that a pre-approved document being used may or may not accommodate the exclusion without grandfathering, and if what the plan sponsor wants is not supported and requires modified language, that could negate reliance and require a determination letter submission.

Take a look at Notice 2023-43 and see if this can be considered an Eligible Inadvertent Failure under the Self Correction Program. If there is no whiff of discrimination and if there were established policies and procedures in place and this one slipped through, then that may be good enough. Having the plan sponsor make a corrective amendment that allows this particular individual to come in early could be included in the SCP documentation if the plan sponsor wants to cover themself formally.

If you choose the print option and then choose the "Other" tab, there is a "Company List" option. That report provides much of what you listed.

I don't see any way to address the potential past labilities here under §4980D. Any attempt to modify the terms at this point can't change how it was documented/administered in the past. Ultimately, I think the only thing you can do it correct the situation going forward and hope that the skeletons in the closet remain there. At least you've cut off the exposure prospectively.

I'm guessing you're driving at the "significant benefits in the nature of medical care" component, and particularly with respect to the upper limit of sessions. Is it 6? Or 12? Or....? That one is an enduring mystery with no good answer I've come across. I'm not aware of any enforcement activity that might shed light on the matter. Here's my general thoughts if you're interested: https://www.newfront.com/blog/aca-and-hipaa-excepted-benefits Common Excepted Benefit #4: EAP EAPs must satisfy all of the following conditions to qualify as an excepted benefit: Not Significant Medical Benefits: The EAP cannot provide significant benefits in the nature of medical care; No Coordination with Group Health Plan: The EAP cannot be coordinated with benefits under another group health plan by meeting the following two requirements:- No Exhaustion: Participants in the other group health plan cannot be required to use and exhaust benefits under the EAP (i.e., the EAP cannot act as a gatekeeper) before becoming eligible for benefits under the other group health plan; and- No Participation Link: Participant eligibility for benefits under the EAP cannot be dependent on participation in another group health plan; No Premiums: The EAP cannot have an employee-share of the premium (i.e., it must be fully employer-paid); and No Cost-Sharing: The EAP cannot have any cost-sharing for its services (i.e., no deductibles, copays, or coinsurance). The most difficult element to interpret is the first requirement that the EAP not provide “significant benefits in the nature of medical care.” For example, there is no specific limit on the number of counseling sessions that the EAP can offer and still remain within this definition. The only guidance in the regulations is a generic statement that employers are to take into account “the amount, scope, and duration of covered services.” The best description of this “significant medical benefits” condition comes from the preamble to the excepted benefits regulations, which provides as follows: The first requirement of…these final regulations is that the EAP does not provide significant benefits in the nature of medical care. For this purpose, the amount, scope, and duration of covered services are taken into account. For example, an EAP that provides only limited, short-term outpatient counseling for substance use disorder services (without covering inpatient, residential, partial residential or intensive outpatient care) without requiring prior authorization or review for medical necessity does not provide significant benefits in the nature of medical care. At the same time, a program that provides disease management services (such as laboratory testing, counseling, and prescription drugs) for individuals with chronic conditions, such as diabetes, does provide significant benefits in the nature of medical care." The preamble subsequently notes that the Departments (DOL/IRS/HHS) may provide additional guidance in the future to better clarify when a program provides significant benefits in the nature of medical care.

There's an additional integration rule in Notice 2015-17, Question 3, but that applies only to Part B and Part D. So I think you're going to need to just break out the retiree-only piece into a separate ERISA plan to take advantage of the retiree-only exception. That's the easy workaround everyone uses for retiree HRAs. You don't want to be having to argue the retiree piece is operating as a separate plan even though it's wrapped into the main 501 with actives--that would be a tough sell. Especially since there's not much guidance there and it's easy to establish/maintain a separate retiree-only plan to avoid the issue.

Who decided to pay out to the estate? who signed on behalf of the estate? If the plan administrator doesn't have a beneficiary form, usually one of the first questions for a death distribution is - Is there a surviving spouse? Did someone answer no to that question? The check should be voided(it might be stale anyhow since its more than 4 months old), the plan should get the tax withholding back from the IRS, the form 945 and 1099-R need to be amended for 2023. then the spouse needs to elect a distribution, and the plan needs to do a new check to the spouse's IRA if that's what they are choosing. Step 1. Unwind the incorrect distribution Step 2. Do the correct distribution Step 3. Figure out what went wrong and change processes and procedures so it doesn't happen again Step 4. Document EVERYTHING Review with ERISA counsel every step of the way if there is any uncertainty. EPCRS has standard correction methods for incorrect distributions.

I always cautioned that such an arrangement was potentially a PT - as an indirect loan.

I may be conservative on this, but I always advised clients that if a business owner took a loan from the plan with the intention of loaning those funds back to the plan sponsor, and then immediately did loan the money to the company, the IRS would have a very strong case to claim that this was an indirect loan to the plan sponsor which is a prohibited transaction. At a minimum, the business owner (after taking the loan from the plan) should loan a different amount at a different time and under different repayment terms if trying to establish that these two transactions were independent and totally separate.

Sounds like there's no "cash" to begin with.

That's how I see it. And remember the MRC needs to be funded in cash. I would think that even the IRS bought the "memo" argument they might challenge the MRC as being in the form of a Promissory Note instead of a cash contribution. Just another argument for having a clean paper trail of events.