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I'm a pretty big fan of autoenrollment. I'm not a big fan of auto escalation. I encourage clients to implement auto enrollment at 10% (requiring no subsequent escalation). It usually solves the problem of getting the forms back timely.

Another consequence might be an unavailability of a professional—lawyer, accountant, actuary, enrolled retirement plan agent, third-party administrator, or otherwise. Some professionals might accept such a client if one is paid her advance retainer in an amount one estimates as enough to cover more time than one expects to work, after carefully considering the extra difficulties of working for a troublesome client. With the advance retainer periodically replenished, to avoid a risk of nonpayment for the next bit of work. Others might be unavailable no matter how big a fee one might earn.

In addition to agreeing with others' comments, if the plan's safe harbor notice contained the language allowing suspension or reduction of safe harbor contributions mid-year with proper prior notice, I would suggest they at least amend the plan to suspend contributions prospectively (with at least 30 days' notice to participants and an effective date of the amendment that coincides with the expiration of the 30 days) to stop the bleeding in 2024, so to speak. They'd still be on the hook for the 2023 contribution and the 2024 contribution through the suspension date, but not for the rest of 2024 and not on an ongoing basis. And it sounds like they shouldn't have a safe harbor plan in the future anyway as they obviously don't understand it and aren't willing to comply with the requirements. On the downside, I suppose giving participants a notice highlights the fact that they were supposed to get a contribution. Side note - I assume that not making the contribution subjects them to ADP/ACP testing. Do they pass testing? If not, does the cost of fixing the ADP test mitigate the cost of SH contributions? I don't do testing, so thinking out loud about another possible approach.

The correction for a missed deferral opportunity in a plan with automatic enrollment is extremely liberal with plans having up to 9-1/2 months after plan year end to start deferrals before penalties kick in. Without the AE feature, the charity will at best have 3 months to offer enrollment to and start deferrals for eligible employees before some significant corrections are required. If they are not up to the task of managing eligibility and enrollment, the AE feature provides some time for their service providers to keep them out of serious trouble. Just a thought.

What is your role? Knowing your limits will help those here answer your questions. The truth is that it's straightforward enough that it seems unclear what parts you are missing.

Potential DOL audit?

Potential plan disqualification.

operational failure in accordance with plan doc terms, potential failure of ADP/ACP, potential failure of TH test, and I hope a need to find another TPA

When I owned my tpa business, out of 450 clients I had aproximately 70 balance forward plans. A handfull of annual and semi-annual, pooled profit sharing plans and quarterly 401k's. Some 401ks had participant direction and some in a pooled account. I also consider brokerage account plans as balance forward. I had around 15 plans where every participant had a brokerage account and I reconciled those plans annually. Most of the plans I had were small plans, under 100 lives. Many of the balance forward clients were banking relationships, assets managed in the trust department, I did the tpa work. I honestly believe there are a lot of balance forward plans getting done at small accounting frims, in excel, incorrectly.

A SH 3% nonelective amount is part of the rate group calculations, whereas a SH match is not. A match is still part of the average benefit percentage test (along with deferrals) though.

Safe harbor match does not factor into passing cross testing.... that's why you design cross tested with 3% safe harbor safe harbor 3% is used for everything to pass testing and remember... you have to pass gateway before you can cross test.....

What is the cause of the new found paranoid thinking?

Hi Everyone, I have an update for you. I spoke to the Office of Regulations and Interpretations of the DOL. They model notice has the Paperwork Reduction Act because this information needs to be seen by the Plan Sponsor/ the Employer. However it does not need to be in place for the participants. The employer can remove if they choose.

I think the IRS still takes the position that you have to have an employer in existence to maintain a plan.